I've spent a good deal of time recently trying to visualize what it might feel like to go through a modern day stock market crash. Then, yesterday, I came across this tweet featuring someone's personal experience going through the 1987 market crash:
Email I got a while ago from someone on what it was like to live through the 1987 crash pic.twitter.com/E5ppU1qC1W— Ben Carlson (@awealthofcs) October 19, 2022
As a reminder, the "1987 market crash" refers, primarily, to Monday, October 19, 1987 when the Dow Jones dropped 25% in a single day (and closed down 22%).
Accounting for the couple of days before and after, which were also significant, the Dow declined by as much as 34%. It took about 2 years for the market to fully recover and go on to set new all time highs.
What made the 1987 crash so scary was because it happened so fast, mostly in a single day. While I don't foresee the Great Depression of the 21st Century happening in a single day, I do expect that we'd have many down-large days. In fact, we've already had ~10 days where the Dow Jones was down about 3% (or about 1,000) points this year alone since the all-time high in January.
But, focusing on the state of mind that was expressed in the tweet: "I was not prepared to find my wife in tears ... her first words were 'You've lost our retirement!'"
Also: "In real time, the crash was a VERY big event. Fear for a changed future was the natural response. Talking heads were saying 'This worldwide event could last for years; our children will have a lower standard of living than we have.'"
If people were talking this way after only one day, then what will they be saying after months of 8-10% declines start piling up? Maybe the drama will be felt only on certain, large-movement days, but the attitudes will start to shift when they check on their portfolios or 401k accounts and see half of the amount they were expecting to see, then realizing that they can't afford what they thought they could, or can't retire and will have to work into their mid 70s.
While I've been sharing content recently about trying to prepare for a large economic downturn (such as expecting to lose your job), I think it's vitally important to prepare mentally as well.
Prepare for the negativity that you'll experience about on social media.
Throwing in the towel. I can't do this anymore.— Vamp Capital???? (@RampCapitalLLC) October 14, 2022
Prepare for the doom-and-gloom that you'll hear about on the news.
Prepare for how you'll feel when you see your once-strong investments decreased.
Prepare for uncertainty, and the hard work that is to come as you find to pay your bills.
My hope is that we, members of Us Enduring, WILL be prepared. Help me share the word so that others will be prepared, too.