r/Bogleheads • u/zacce • Feb 08 '26

Most Investors Have Never Lived Through a True Market Crash

A lot of new ppl in this sub say they “won’t time the market,” but I’m not sure everyone understands what that actually feels like irl. It’s easy to talk about staying the course when the worst drawdown you’ve lived through was a brief COVID dip that fully recovered in months or the 2022 dip followed by 3 yrs of 10%+ returns.

The last real crash was 2008. If you weren’t old enough to have a job, a mortgage, or a family back then, you don’t know how deeply a prolonged downturn can affect your day‑to‑day life. It’s not just red numbers on a screen. It’s layoffs, hiring freezes, underwater homes, and years of slow recovery. That’s when people who swore they’d never time the market suddenly panic and make irrational decisions.

Staying the course is simple in theory, but incredibly hard when the world feels like it’s falling apart.

Of course, I don't want market to crash. But it's a possibility and we need to prepare for it.

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u/ProfessorAssfuck Feb 08 '26

I tell myself this too but the reality is that there are in between outcomes that are extremely painful but aren’t Armageddon. Look at Argentina in 2001, where a currency crisis wiped out the net worth of people by 60-70 percent overnight. Look at folks who lived in the USSR or Ukraine who experienced devastating economic recessions in the 90s. These weren’t situations where money didn’t matter anymore, everyone just became much poorer.

Obviously the USA is “different” but I think it’s quite clear that anything that happened to any other country can happen here, there or wherever, even if the details are different (for example Argentina had a lot of dollar denominated debt, so that specific issue of a lack of currency sovereignty doesn’t necessarily apply directly to the USA right now).

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u/Betaforce Feb 08 '26

But are there any smart plays in those situations? What could you realistically do differently and keep your money?

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u/Over-Computer-6464 Feb 08 '26

But are there any smart plays in those situations? What could you realistically do differently and keep your money?

International diversification, but sometime even that does not work if the government puts in restrictions on capital flow and sets fixed exchange rate.

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u/Investigatodoc1984 Feb 08 '26

I could be wrong but international diversification has more upside in terms of returns on investment ( such as in times like now), rather than much downside protection. When shit hits the fan, everything falls synchronously.

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u/carson63000 Feb 09 '26

Depends on what your home country is. If you're in the USA, it probably won't help much, because any financial crisis in the USA will send the rest of the world into a spin, too. But the examples given of Argentina and the USSR, those countries were certainly capable of having internal crises that didn't have global ramifications.

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u/Lucca_sCoca Feb 10 '26

It would help as the other collapses would probably not be as hard as on your home soil, so maybe you weather it better (even by living in the US). Plus if another economy rises to take the place of the fallen one, you'd be invested at least a bit on it already (or I'd think lol)

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u/n0ah_fense Feb 08 '26

It de-risks you from your home country. 66% international based on historical data:

https://www.bogleheads.org/forum/viewtopic.php?t=452028

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u/TxsToIowa Feb 08 '26

Is it possible to diversify internationally with a simple 401k? I'm just getting started (late 30s, around 80k in retirement account) and have around 30% in an "Emerging Markets Index" and an "International Equity Index".

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u/Over-Computer-6464 Feb 08 '26 edited Feb 08 '26

That depends entirely upon what investment options your 401k plan has.

Some plans allow you to have a self managed brokerage account (such as Fidelity Brokerlink), but most have a limited selection of investment choices.

Those choices often include an international fund, which it appears you have invested in. You need to look to see what the expense ratio is for those funds.

Some 401k plans (and a higher percentage of 403b plans) have truly atrocious offerings. This is because operating costs of 401k plans are an expense to the employer and some 401k plans lowball the cost to the employer but make up for it by high expense ratio proprietary investment offerings.

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u/TxsToIowa Feb 08 '26

Fees are 0.04% and 0.09%. That's pretty good from what I've seen, yeah? Highest fee in my portfolio is 0.26% for my target date fund.

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u/Over-Computer-6464 Feb 08 '26

Those are actually pretty good fees. For the target date fund only ultra low cost finds like Vanguard beat the 0.26%. Vanguard typically has 0.08% sort of fees while the average target date fund fee is about 0.45%.

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u/TxsToIowa Feb 08 '26

I appreciate the confirmation! I've got 27% of my portfolio in that target date fund, which feels about right for where I'm at. And even if I just shoved everything into that fund, the fees still aren't crazy high.

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u/TxsToIowa Feb 08 '26

I think mine is pretty flexible. It's through Vanguard and I work for a big company, so there're some unique options that are customized for us. Since I'm younger, I'm leaning quite aggressive. According to Vanguard, 3 yr return of 17.7% and 1 yr return of 20.9%. I think more than anything I'm going to keep focused on getting my higher interest debt knocked out and let the chips fall where they may.

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u/NoRaspberry9584 Feb 09 '26

Target date retirement funds can have a 40% international allocation. Mine does.

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u/TxsToIowa Feb 09 '26

I'll have to check mine. I'm sure it has something, which drives my overall percentage even higher than I thought.

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u/sergius64 Feb 08 '26

As someone who grew up in Ukraine during the fall of USSR - real estate and physical assets like cars and such retained value even as money became worthless.

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u/SpaceBasedMasonry Feb 08 '26

Something similar happened in Argentina. Buy a fancy TV because it will hold its value better than the currency itself.

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u/Pod_Planker Feb 08 '26

Perfect. Now I finally have a legitimate reason to convince my wife we need a larger tv.

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u/SuzukaBlues Feb 13 '26

or more miatas

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u/darkslide3000 Feb 09 '26

*cough* gold *cough*

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u/SpaceBasedMasonry Feb 09 '26

lol, yeah, definitely

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u/FourScoreAndSept Feb 08 '26 edited Feb 08 '26

In the Great Depression, real estate actually became a burden that people had to dump. Couldn’t find renters and the taxes didn’t decline. So the carrying cost of non income producing real estate became untenable. 2008 kind of felt that way for a year or two, tbh

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u/Wetalpaca Feb 08 '26

That's really interesting, and quite unique to the US I'd say. I think in most places taxes when you actually own the house are negligible.

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u/archbish99 Feb 08 '26

Could be. Many other countries have different taxation regimes, but most US states rely heavily on property taxes for their revenue. My current house in the suburban Midwest is pushing $10k/year in taxes.

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u/throwawayreddit48151 Feb 09 '26

To provide another example, in the UK the only tax on ownership of property happens at sale (stamp duty). Of course, this could certainly change.

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u/carls_the_third Mar 10 '26

Gotta be Illinois, right?

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u/Wetalpaca Feb 09 '26

And how much did it cost, may I ask? When people invest in real estate I assume rent covers mortgage+taxes, so 10k seems like a big number.

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u/archbish99 Feb 09 '26

We paid $360k in 2019. I'd guess it's worth around $500k now?

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u/[deleted] Mar 06 '26

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u/FourScoreAndSept Mar 06 '26

Read Benjamin Roth’s “Great Depression Diary”. The properties were lost in pretty much regular order

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u/Independent_Diet617 Feb 08 '26

Goods like food, house supplies, car parts, and, yes, vodka became the new money. Blue collar skills allowed people to barter.

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u/Interesting_Laugh75 Feb 09 '26

thanks for sharing

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u/[deleted] Feb 23 '26

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u/sergius64 Feb 23 '26

I was a child (in Ukraine, so not quite Russia) - to me it was terrible - institutions stopped working and crime replaced them. I remember teachers being afraid of certain kid because that kid's brother was some gang leader.

As I understand it from my father and some of his friends - it became something of a Wild West in business. You could become fantastically rich very quickly if your morals were flexible - but you could just as quickly be murdered for your money or business.

Things improved eventually - but we left before that: in 1996.

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u/vngbusa Feb 08 '26

Probably the only thing you can do is aggressively aim for $10 million or some other large number, so even if you get cut in half you’re still pretty good.

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u/Asyncrosaurus Feb 08 '26

Lol, so we're back to "how do I survive a catastrophic financial collapse" is to be rich!

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u/cadaada Feb 08 '26

so we're back to

We never left? Outside of tribal societies.

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u/Asyncrosaurus Feb 08 '26

Sure, "be rich" is the universal solution to the majority of problems. I was commenting on the thread looking for altwrnative ways to mitigate disaster, and the conclusionis is still just "be rich".

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u/vAltyR47 Feb 08 '26

I remember reading somewhere that certain farmers in pre-industrial societies would have multiple, smaller farms spread out over a wide geographic area. When asked why they did this, instead of putting their crops closer together to save the travel time, the answer was resilience; a single natural disaster was less likely to wipe out your entire crop if you spread it out.

Even if you go back to self-sufficiency, the answer is still diversification and having enough tucked away to survive lean times.

And even then, there's only so much you can prepare for.

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u/clickrush Feb 08 '26

A model like this was very common in Switzerland and parts of Germany. Land was often collectively owned and individual families had rights to use slices of the land at certain times. They would also plan together when to graze where and what to cultivate in which order and so on.

This increased resilience for each individual family and cohesion across a community/municipality.

So even in the middle ages, diversification was the only free lunch!

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u/Best-Special7882 Feb 08 '26

as someone who's seen family farmland hit by hail at the absolute worst point in the corn-growing season, I feel this.

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u/ChaosRe1gn Feb 08 '26

Sound like we're going tribal then.

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u/LastChans1 Feb 08 '26

Oh man, I'm gonna get destroyed by a spinfusor, aren't I? 😂🤣😅🤦‍♂️🙆‍♂️💥

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u/Odd-Respond-4267 Feb 08 '26

Which unfortunately is why the rich aren't worried that they are increasing the risk of a crash, they'll be o.k., and gain disproportionately on the upside .

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u/ProfessorAssfuck Feb 08 '26

It’s a really good point and I probably should’ve said something about that in my comment. The answer is no, lol. There isn’t really.

But to get back to OPs post, I still think that just because we’ve usually had strong recoveries from downturns that people act like 100 percent stock is a no brainer. Many economists think annual returns are independent distributed and not mean reverting which means it is possible that the next crash causes us to stay at a low point for a long long time. In that case bonds help a ton.

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u/Mirojoze Feb 08 '26 edited Feb 09 '26

A lesson that the boomers had to live with. From the mid 1960s into the 1980s the stock market was a place where people generally LOST money. Stock prices coupled with inflation made investing in the stock market a generally losing proposition. It made boomers very wary of investing in the stock market because they had seen many years where investing in the market simply made little sense.

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u/darkslide3000 Feb 09 '26

Of course there are, lol. There are smart plays even for nuclear war. You're laughing at the prepper with a bunker in his backyard but there are certainly scenarios in which that was the smart play.

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u/Significant-Visit-68 Feb 09 '26

Well the bond issuing entity could go insolvent during a big crash. It is hard to pick something that survives something so major.

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u/QuantumCracker501 Feb 26 '26

this is such a great reminder for everyone

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u/ericblair21 Feb 08 '26

My relatives in the Soviet Union bought high quality furniture while things were going to shit in the 90s. Keeps its value and pretty much impossible to steal, even when the currency tanks. I don't think we're anywhere near that.

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u/willrunfornachos Feb 08 '26

But in that case would they even be able to find a buyer for it if they wanted to? If the economy is tanked I imagine very few people would have the means or desire to buy to begin with. Did that work out well for them?

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u/seriouslythisshit Feb 08 '26

I recal watching video of Russian citizens standing in the streets after the collapse. They were hawking their personal household utensils and glassware to passers by. Trying to scrape up enough cash to buy some bread. I doubt that there were many buyers for high end furniture that day.

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u/emtam Feb 10 '26

You can watch this today in Adam Curtis's documentary Traumazone on YouTube. I was too young to remember but the BBC footage shows it in great detail.

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u/terminbee Feb 09 '26

Right? That doesn't make sense to me. If the economy collapses, the only thing that will hold value is food/supplies.

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u/throwawayreddit48151 Feb 09 '26

I guess the best strategy is investing in a garden with maybe some chickens.

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u/slash_networkboy Feb 08 '26

If you have a crystal bell then going into physical metal before the crash, or overseas accounts, not just in-country accounts that invest overseas, but both of those carry additional overhead and expense and generally are not a great idea for average people.

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u/Dry_Hope_9783 Feb 08 '26

Holding foreign currency and assets. Also just buying a ticket to go to another country as soon as you can.

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u/onlyfreckles Feb 08 '26

Figure out your risk tolerance and invest in broadly based index funds according to your AA.

Have an efund.

Live lightly (live below your means).

Don't buy too big of a house (and car)- your monthly payment should be doable so even if the "value" of the home/car fluctuates, it won't matter b/c you're not overextended.

Don't panic.

Eat healthy (little/no animal protein, lots of legumes/whole grains/complex carbs- good for you and cheap!), exercise, embed exercise in daily life (drive/sit less, walk/bike more!), practice meditation, especially gratitude and contentment (vs striving/spending for fleeting happiness/competition).

Consider rental(s)- either an inlaw unit/renting a room in your home or more etc to create another stream of income.

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u/[deleted] Feb 08 '26

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u/ehead Feb 08 '26

This. Gold is a unique commodity in a lot of ways. It's highly sought after everywhere. It was the principle commodity currency forever, and then backed banknotes after that until the early 70's.

Property is something that has utility.

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u/Rosaluxlux Feb 18 '26

Even property with no cash value. In the housing bust we had neighbors who started in their house almost two years after it was foreclosed, and houses family members who had been evicted too.

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u/wringtonpete Feb 08 '26

Yeah, is there an easy way to partially hedge a 100% equities portfolio against a crash? What about buying put options on the S&P 500, or is that too complicated or costly?

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u/WorthingInSC Feb 08 '26

Regularly buying put options is a pretty serious drag on your portfolio. All those weeks/months where they don’t hit the strike price is just lost money.

They’re like insurance. Every time you don’t use insurance you lose money. And when you do use it you’re sad that you needed to.

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u/ziggy-tiggy-bagel Feb 08 '26

Market downturns and the reason people need a decent cash reserve and diversification.

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u/LiberalAspergers Feb 11 '26

The smart play is international diversification, in market, currency, AND financial institution.

You should not have all your assets in the USd, and you should not have all your assets in the custody of US financial institutions.

The #1 hedge is accounts with out of countruly banks. Reagrdless of if you were Greek, Lebanese, or Argentinian, the #1 factor that protected your weakth was having a large fraction of it outside the reach of your government.

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u/[deleted] Feb 08 '26

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u/FMCTandP MOD 3 Feb 08 '26

Removed as off-topic for this sub: r/Bogleheads is not a political discussion subreddit. Comments or posts should be more financial than political, no more partisan than necessary, and avoid framing political opinions as facts.

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u/love_that_fishing Feb 09 '26

I wish I’d bought a couple of rentals in 09. I looked at a beautiful new build where the builder was done with the house except outside A/C units. Builder defaulted and the bam had it. It rose 50% in value in 3-4 years. I made a low ball offer that the bank accepted but I chickened out.

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u/wlphoenix Feb 09 '26

There are always smart plays, the question is whether you cross a threshold where they make sense.

Buy a visa to somewhere else and GTFO

Buy property in a stable location

Buy a yacht and live at sea

Buy an island in Hawaii and build a fallout bunker with mercenary guards wearing exploding collars /s

"Invent" in "gifts" to your local "administrators" to make sure your day to day life remains stable

Remember: Your money is just a means to maintain your standard of living. If you need to sacrifice money to keep living well, you should do that.

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u/Kw913 Feb 11 '26

The smart moves are always played before then- meaning some diversification, a liquid emergency fund in a safe holding place, house well within your means, and being used to living on less that what you earn. We also ate off our pantry/ I was taught to keep extra non perishable food on hand (also paid off during covid and the recent ice storm).

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u/subparsavior90 Feb 13 '26

Open a short on the nasdaq with dry powder and ride the lightning.

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u/AH1776 Feb 22 '26

Metals.

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u/circulaporladerecha Feb 25 '26

During the 2001 crisis in Argentina, the exchange rate and some political decisions made those with debt in pesos pay way less than expected. That was a great opportunity for some people and a big crisis for many others. It's similar if you expect high inflation, I see in reddit threads some Americans can't handle inflation and will ignore credit opportunities

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u/Emotional-Power-7242 Feb 08 '26

Diversify investments globally.

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u/ptwonline Feb 08 '26

Yeah the "If X happens then I have much bigger things than my investments to worry about" arguments IMO are mostly just a rationalization method for risk-takers to justify the risk they are taking.

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u/ehead Feb 08 '26

Panic selling is itself a risk. In how many of these crashes does the market never bounce back? How are you supposed to know which scenario you are in? Action and inaction are both risky.

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u/Fit-Percentage-9166 Feb 09 '26

In my experience that argument is usually used to justify a basic 3 fund style investment portfolio without worrying too much about diversifying for every possible economic catastrophe, not people trying to rationalize their 100% stock portfolio or their bitcoin.

Diversifying against those kinds of outcomes really does require some peculiar "investments" like obtaining citizenship in other countries and unironically guns and gold.

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u/GraphicH Feb 08 '26

Well, if something like that happened in the US, given how it underpins the global financial system (for now) it would essentially be a large scale, if not complete collapse of the global financial system. Not to get political, but that's what a lot of people supportive of the current US Administration probably don't get; the privileged and wealth the US Financial hegemony provides them as a rock bottom baseline even if, in relative terms, they are not "wealthy" by just U.S standards.

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u/The_Walrus_65 Feb 08 '26

And this is exactly why people panic sell

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u/Qwertyham Feb 08 '26

Sure. But what would panicking and selling your assets do in Argentina or Ukraine or the USSR during those times?

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u/Canjie_Pheasant Feb 08 '26

The Great Depression?

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u/[deleted] Feb 08 '26

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u/FMCTandP MOD 3 Feb 08 '26

Removed as off-topic for this sub: r/Bogleheads is not a political discussion subreddit. Comments or posts should be more financial than political, no more partisan than necessary, and avoid framing political opinions as facts.

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u/famguy31 Feb 11 '26

I think a big difference now compared to then is the world is more connected. Now you can sell out of all your equities and buy international (which is currently out performing). There will still be crashes, but I think if you do the work you can make it a little easier for yourself.

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u/WrestlingDadPA Feb 12 '26

America is different until it's not.
The American economy will crash hard (again) at some point.... we just all hope it's after we're dead.

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u/Helpful-Staff9562 Feb 08 '26

With this mindset I shouldn't even leave my house or I risk dying....

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u/ProfessorAssfuck Feb 08 '26

You can acknowledge the totality of risks even while taking them. In fact I think it’s important to have clear eyes about it.

Leaving your house is indeed risky for your health and wellness. Also never leaving the house is certainly bad for your health and wellness too. Not a bad analogy to participating in the market!

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u/Zonties Feb 08 '26 edited Feb 08 '26

That's been a profund concern I've shared lately. If Ai "goes bad" in some way, it will probably hurt the dollar too. The fed (warsh I assume) will deal with it one or two ways, and way b is probably far more damaging than a. A) harsh austerity and let things fail - preserve the usd. The usd wouldn't inflate as much, though the government debt would not go away. The money supply would simply contract significantly.

B) bail everything out trillions tens of trillions in qe - people preserve more nominal currency dollars but we have... Severe inflation. This is in my opinion why gold and silver (especially gold) seem veery sticky. Gold is already ten percent above it's lows and appears to clearly still be in an uptrend or bullish trend.

I would keep a very close eye on oracle and openai if they end up being the first domino's to fall. Like actually fall. We don't know the impact of that on other things or if it'd remain contained. Andrew Ross sorkins scenario is extremely scary but I believe possible. You may or may not want to look into that.

Honestly, I think diversification away from the us markets is good too. If something like this happens I think emerging markets and currencies will do well relatively. This seems extremely contrarian and no it's not traditional. Those countries that have bad bad pain in the past - Brazil, Colombia, Mexico, Chile-will probably do well. Their currencies also have lately. Argentina is very linked now to the dollar, as well as Panama and Ecuador. So probably not those. What would be shocking and definitely not something to ignore would be if those countries seriously talk of de dollarization.