Hey guys, it's sasha, the stock market continues crashing dropping by seven point three percent in the last week from wednesday. Fourth of may, taking the year-to-date loss to 16.8 percent. Nasdaq is getting absolutely smashed. It is down 26.6 so far this year and no wonder all of the big tech stocks are getting destroyed.

Tesla alone is down 34.4 percent dipping below the 800 mark. Yesterday, smaller growth stocks have been completely wiped out. Fiber is down 61. So far this year and palin's here is 60 down after a disastrous earnings call yesterday and remember that gray stocks started falling in january 2021 and then the sale really accelerated hard in november.

Take any growth stock you like, and the picture is the same you if you are invested in some of them are probably 70 80 or even 90 down from the peak. Naturally enough people are starting to panic. People are starting to make irrational decisions. So in this video i am going to tell you what you need to do during this stock market crash things.

You need to think about things you need to know and how to best look after your money because make no mistake, we are now looking at being in a proper full-on market crash. The stock market is already 17 down and the likelihood is that we are probably going to have more pain to come with every new inflation figure and new interest rate updates, sending the stock market into a crash frenzy. No matter how predictable the results are like. We have had recently, and inflation is still going to climb, it is continuing to climb in interest rates, are going to continue being jacked higher and higher every six weeks.

So it looks like we're going to be in the situation for a little while i went and took a look at every major market crash since the second world war, and i made myself a little spreadsheet. Looking at the peak and bottom of each market, i looked at the intraday rather than closing prices to get these to get the maximum difference, and you can see a few really interesting clear patterns. There were two flash crashes, the crash that we had in march 2020. Recently, when covert arrived and the black monday 1987 crash, now those two were fairly brief crashes and they are very different to all the other ones because they generally were set up by a very specific one, unique event.

It was one giant exact trigger so two years ago. Everyone panicked about the arrival of this unknown, but a potentially deadly virus, and in 1987 we had the biggest ever one day stock market crash as cell pressure built up and went into a spiral and the s p 500 lost over 20 percent in one day. Both of those crashes were relatively short-lived about a month to go from top to bottom in march 2020 and three months in 1987. But you can see that every other crash that we've had in the last 80 odd years has been the low and slow type.

Instead of losing 3.4 percent or 10.7 per 10 days that we got during the flash crashes, the other slow stock market crashes only lose an average of about 0.7 percent every 10 days and the average crash in those ones. Last more like a year and a half. This is going to be important later on, so keep that at the forefront of your mind, these crashes tend to have a very broad mix of different factors that are convoluted, sometimes related, sometimes not so much, and it is often very difficult to pinpoint one exact specific Circumstance that caused the crash. Sometimes analysts like to make up a big story afterwards, but it is not very clear a bit like the situation we're seeing today where there's a whole mix of things as the post covert demand, downturn, supply, chain, crisis, government, printing records amounts of money, inflation, spiraling interest Rates going from old time historic lows of zero percent, maybe one of the highest levels ever over the next few months and far far below inflation, a situation we've never seen before.

There is a lot of different stuff going on at the same time, and perhaps the most interesting thing in all of this is the fact that there isn't a huge amount of variance in the data from these old crashes, even though they all happened entirely. For different reasons, in entirely different times, the smaller crashes in 1962 and 1966 were a bit shorter than the rest, but they were sandwiched between 1957 and 1968, so that was a bit of a weird time in the 60s anyway, every other crash on the list took Over a year to hit the bottom and the peak before we started, this particular descent was on january 4th. So we're only only about four months in remember that and you can see that the rate at which we are crashing at the moment is 1.4 percent, which is relatively high. So the hope there is that perhaps we're looking at a faster route down like what we had in the 1960s, and maybe we were just going to get away with a drop of 25 or 30.

Remember now we're only on 17, but then again each crash is unique and the worst thing about some of the biggest crashes is that they got worse later on in the crash, rather than at the beginning. We tend to think the crash is kicked off by this one really bad day, but actually tends to be the opposite. The stock market peaked in october 2007 before the financial crash, and the market was 19 down 11 months later in september, before the really sharp sell-off really started from october to february, and it was the same during the dot-com crash. The big bad sell-off started two years after the peak before the crash, and it was the same in 1980 and in 1973.

Well, you get the picture. The potential problem you have on your hands, if we're in for a proper market crash, is that the worst is probably yet to come in terms of the rate at which the market is selling off, however hard. That may be to believe, and we're probably going to see some serious selling next year if the previous stock market crashes are any indicator, but there are some really interesting things that i'm going to get to later, so so make sure you listen for that. The obvious question, though, becomes at that point well sasha if the market does go and bomb all the way down losing 50 or whatever, like three out of the last four major crashes, that weren't a flash crash.

If the market is about to do this real stinker, is it not prudent to go and sell out of all your stocks and sit on cash waiting for the world to burn and then go buying up the stuff left at the bottom in late 2023? Well, here is an interesting thing that you need to think about. Imagine that you do decide to sell what is your strategy after selling out, because this is a really crucial point if you don't have a good strategy after you sell out, and you want to be in the stock market long term, because you know you're investing, then You better know what you are planning to do to buy back in. Are you going to wait for that 50 mark? Well, in most of the big crashes, it doesn't ever reach 50. So what are you gon na? Do then? What happens if it never gets there? Here's the timeline of the dot-com crash is this the bottom? No, is this the bottom? Maybe this is the bottom.

Oh i see this is the bottom, except when you are at each of those points. Without the benefit of hindsight, you have no idea. It is really difficult to tell the bottom was in september to october 2002, but for all you knew you could have been in another death cab bounce and it could have fallen even further. Maybe you decide to go back in when the market is down 30 or 35 percent, but remember this data only has 10 slow market crashes in it.

There is absolutely no way to infer any rules. This is a tiny, tiny data set. It's a bit like flipping. A coin twice at landing heads and you determining that it will land heads every time.

There is absolutely no reason why the market can't bottom out next week and then decide to start going up. Maybe inflation data will come out tomorrow and be better than expected. I doubt it, but it could be, or maybe it will get better next month, maybe the month after maybe something else happens. Maybe the war in ukraine resolves and then the stock market goes and rebounds, leaving you with a pile of cash.

After you happen to sell at the very bottom, there is a pretty decent potential win. Don't get me wrong if you do time the market right, but there is a much bigger potential loss if you do not, and unfortunately this isn't a game, so you can't just go and reload when you find out what actually happens so you only have one shot And investing is about managing risk as much as it is about maximizing your gain. The risk, if you sell out is that if the market goes and bounces by 10 next month, you're going to be sat there thinking well, this is another one of those false gains and then it's going to fall further. So i'm going to wait and then you'll keep sitting on that cash and if the market does not go and crash right back down again and goes and recovers it's losses say by the end of the year, then you won't have just lost 17.

The way down. No, in order to go up from 83 that we are at at the moment relative to the peak back to 100 you're going to have to get a gain of over 20, and that will be what you will have lost. Do you want to gamble being able to sell out and buy back in at exactly the right moment, for maybe a 20 or 25 cent gain? If you somehow get it right? If you know that there is a significant risk that you won't get it right and end up losing more than 20 instead, because here is one thing you really have to think about. Psychology is a very weird thing.

You will find it much harder buying back into the stock market after it's gone up, 20 from where you sold. If that happens, you will probably be sitting there kicking yourself on the one hand, but also thinking, but what, if it does drop again and you could end up waiting as the market goes up 30 or 40 from here instead, and here is the best bit. If you stay in the market and keep on buying in on the way down, you'll be buying in at lower prices as the market drops, and you will collect a portion of that 20 upside that you could have if you time into perfection anyway. If your portfolio is already relatively large, maybe it's going to be a smaller portion of that 20.

But if you only recently started investing, you might pick up a big part of that extra gain without having to sell one interesting thing to note about market crashes. Is that growth stocks tend to go first and the big guys tend to follow, and that is natural. That is because grace stocks have a less certain future. They go further into the future in their valuations, when the future is less certain when there are more potential problems being forecast, people are less happy keeping those growth stocks on their portfolio and they get rid of those first.

But let's look at some previous examples. Look at amazon amazon is a very popular example of what was an early-stage growth stock in 2000. That then became a success, but they lost 95 around 95 of their share price during the dot-com crash and amazon hit its peak in december 1999. That was about three to four months before the stock market overall peaked.

Amazon's share price then took seven months to lose about 60 and the bottom came in september october 2001 and a full year before the rest of the stock market bottomed out - and this is quite important - ebay peaked in march 2000 about the same as the stock market And it bottomed out, just nine months later in december 2000, a whole year and a half before the rest of the market did but then look at some of the big tech guys from the time, because it's interesting to see the difference. Oracle, the darling in the stock market of that period before the crash actually peaked in september 2000 and they bottomed out in june 2002. So they started late and they finished late much later than the smaller grow stocks. Cisco peaked in march 2000, along with the rest of the stock market and bottomed out, along with the stock market in october 2002, some two and a half years after they started falling.

And if you look at some of the popular growth stocks today, i don't know name whichever ones you like: netflix shopify, blog etsy. Most of them peaked in november two months before the rest of the market did, and many of them are now 70 to 80. Down about seven months down the line and as the stock market decides to go and follow the path of most of the previous low and slow crashes and takes a year and a half to go and find that bottom, then we're about a year away from that Bottom today, so, if you're investing in some of these earlier stage, companies and you have a huge paper loss - maybe 80 or 90 down the risk - is that your stock may well be ahead of the game, because that tends to be how those types of stocks perform. They have already sold off hard ahead of everybody else and in any case, remember that amazon's peak before the dot-com crash was about 103 and even after losing 36.

So far this year it is still up 20 times from that peak. If you invest in the right companies for the long term in 20 years time, every single investment you make today will look good and if you have an opportunity to double or triple your return by buying companies burning on a dumpster fire. That is only a bonus and big market drops that give you that unique opportunity to buy at a massive discount don't come around every day. This is not the time to go and run around and panic.

It is not the time to wave your hands in the air and scream. This is when the money is being made by the few hoovering up the stocks being sold at a massive discount by the many. If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching.

I really appreciate it and, as always i'll see you guys later, you.