How I Prepare for a Stock Market Crash
Is the stock market going to crash this year?⠀⠀⠀⠀⠀⠀⠀⠀⠀
In the past few weeks and months I have heard more and more people calling for a stock market crash, and it is not just the pessimists saying this.
We have actually seen some pretty successful and well-known investors recently sell out of their entire portfolio trying to short the market and really going ahead and making
that bet that the stock market is going to crash, or at least see a major correction.
In this article, I will share what I think about the reality of the stock market crashing this year and how I am going to be prepared for whatever happens.
The S&P 500 is currently down about 9% in the last month, so we are entering correction territory in the markets. This coincides with so much happening around the world economically and socially, and we find ourselves in a very interesting crossroads.
Personally, I do not think that the stock market is going to crash, but I could be wrong. I do not have any information that tells me “YOU NEED TO SELL EVERYTHING NOW!!!” and buy back in at a lower price because this ship is sinking. That is not where I stand right now, but I want to be prepared for whatever happens this year, so I am doing two things to make sure I am in the best scenario when it comes to a stock market correction or maybe even a more severe stock market crash.
1. While we are waiting to see what happens in the investing world, I am going to spending my time researching. There are always people claiming that the stock market is going to crash, cryptocurrency is going , or another end-of-the-world-type claim. If i was to believe every person I heard say that and sell every single time, I would have lost all of my money and I would not be a successful investor.
I research to understand how to decipher when people are claiming the “sky is falling” and I have to figure out where the truth lies. I always spend time researching because I want to understand where these claims come from and get a clear picture of why somebody would say that the stock market is going to crash.⠀⠀⠀⠀⠀⠀⠀⠀⠀
2. While I am researching the market conditions and developing my theory about what I think is going to happen, my next goal is to increase my reserves.
I am currently creating additional income streams, saving more money, and only dollar-cost-averaging into an ETF I like to diversify my investing portfolio, and any leftover money goes into my reserve fund. If, and when, the opportunity presents itself to purchase good investments, I will be able to since I have stockpiled up my cash reserves. This could happen in the form of a correction in the markets, or maybe even a larger stock market crash, but I can guarantee that I will be ready to take advantage of it if it happens.
I am starting to prioritize researching and my reserves because there is so much negativity and uncertainty in our current markets, and I think I have a win-win situation regardless of how the year plays out.
If the stock market continues its trend of rising, the current positions I have will grow in size and increase my net worth.
If the stock market corrects, or crashes, I will have done the research I need to recognize great buying opportunities and act to take advantage of them. This means I will have obtained more of certain assets, companies, cryptocurrency, etc. I believe in and will win the long-game.
What do you think will happen in the markets this year? Will we see a stock market correction? Will it crash fully? Or will it continue shooting up?
Watch my full video on How I Prepare for a Stock Market Crash on YouTube here.