October 29th is the anniversary of the big bang or the first big stock market crash, which was a large contributing factor to the great depression of the 30’s, and it begs the question, when is the next big stock market crash, and how can I prepare for it?
How bad was the crash of 1929? The following useful graph might help:
Amazing stuff, eh? I didn’t know about this period.
- There was a short recovery in January 1930, and then everything went down from there
- It took a long time to get back to 1929 levels
- There was still a great deal of market volume along the way too
What Can We Learn From This?
The Economic situation back then has about as much to do with today as it did with the great Tulip Bubble Burst. Some say the world is a very different place. Don’t get me wrong, this kind of catastrophic drop will happen, just that comparing 1929 to now is foolish. So many things are different, and not much can be learned from 1929 (other than this can and will happen again). If you’d like PBS supplies this Useful Timeline Leading up to the Crash, if you think you can find any parallels there.
Is this another “fire and brimstone” rant about losing money? No, if you are an Index’er or Couch Potato I would give the same advice I gave many months ago (and stole it from our friend Preet), Live With It and Don’t Look. You will most likely have to re-balance in a while, but do that when you usually would and go back to your regular life, is the only advice I could give.
If you “timed” the market right, good for you. It is most likely through blind luck, but good on you, if you dodge the “big one”, but it was luck (unless you are part of the inner sanctum of traders who knew it was coming, in which case you are most likely guilty of Insider Trading).