Investing

What did you learn from your first market crash?

  • Last Updated:
  • Jun 16th, 2020 12:21 pm
[OP]
Jr. Member
Mar 20, 2018
163 posts
101 upvotes

What did you learn from your first market crash?

A lot of people on this forum had never experienced a large-scale market crash before March 2020, myself included. A lot of investment books talk about the importance of psychology, sentiment, buying low selling high etc. What you learn is only tested during market crashes when you have skin in the game. Most valuable lessons are those learnt from your own mistakes.

Talking about myself, I did not sell anything and, by pure luck, I had a large cash position in early March. I did buy a lot of stuff but slowly and starting from the beginning of April. I wish I had done more aggressive buying during the gloomiest days of March. I wish I had stayed more focused on my goals and disconnected from fortune tellers. I wish I had deployed more cash. But this is easy to say in the hindsight.

When was your first market crash? What did you learn from it? What could you have done better? Share experiences.
126 replies
Deal Addict
User avatar
Mar 16, 2010
3207 posts
1761 upvotes
Burlington
Stocks always go up.
Member
Jan 17, 2018
271 posts
190 upvotes
I learned that common sense doesn't apply to stocks.

Companies aren't making money, people are becoming unemployed, economy is broken, stocks going up like there is no care in the world. Huh? Doesn't make sense.

Also I learned A LOT about stocks in general as more people were posting, sharing info and talking about cool buys during the crash and afterwards. When it is a regular cycle, people aren't quite as excited, as the deals are a lot rarer.

I think there will be another crash if there is a 2nd wave and they shut down the economy again. If there is a 2nd wave and they keep everything going then markets just gonna keep going up and up and up.
Deal Fanatic
User avatar
Feb 28, 2006
7059 posts
616 upvotes
Richmond Hill
I learned that when the red days are huge, you should wait and see if the trend continues. If it's been a couple of weeks, then I think it's time to DCA. Never time the bottom as each time it goes down, that may be the bottom.
Deal Addict
Nov 9, 2013
3721 posts
3286 upvotes
Edmonton, AB
Handcake wrote: Companies aren't making money, people are becoming unemployed, economy is broken, stocks going up like there is no care in the world. Huh? Doesn't make sense.
The stock market is not the economy. This is not new. Very frequently there are periods of seeming disconnect between economic realities and market realities. For example, in 1968, a year of great political unrest, assassination of MLK and JFK and growing protests over Vietnam wars, there was a recession in the US. Nonetheless, the market was up 10.8% for the year. https://markets.businessinsider.com/new ... 1029273829

I'm constantly reminded that no matter how hard I try to stay analytical and unemotional, I still experience a lot of fear at times. I've also learned that the investing habits / processes I've built up are pretty good at stopping me from acting on this fear.
Keep calm and go long
Deal Fanatic
Feb 4, 2015
5621 posts
2178 upvotes
Canada, Eh!!
Learned that just when you think you know it all or have found that can't lose stock... the market will humble you.

No matter what stock or market... don't chase it... there will always be a buying opportunity.
July 13, 2017 to October 25, 2018: BOC raised rates 5 times and MCAP raised its prime rate next day each time.

2020: BOC dropped rates 3 times and MCAP waited and waited to drop its prime rate to include all 3 drops.
Deal Fanatic
User avatar
Dec 28, 2007
7553 posts
3814 upvotes
Alberta
Dpack22 wrote: Stocks always go up.
x2. And the worse the bad news is, the higher the market goes.
Deal Addict
Jun 18, 2018
1214 posts
740 upvotes
Toronto
Never panic sell when you're down, it will recover. If anything, buy on the big dips.
Deal Fanatic
User avatar
Jun 19, 2001
8288 posts
1965 upvotes
Use a stop loss!

Do not "average down"

protecting capital is #1

The vast majority on rfd have never been through a crash, keep that in mind when reading

NEVER forget this "The crash that followed saw the Nasdaq index, which had risen five-fold between 1995 and 2000, tumble from a peak of 5,048.62 on March 10, 2000, to 1,139.90 on Oct 4, 2002, a 76.81% fall. ... It would take 15 years for the Nasdaq to regain its dotcom peak, which it did on April 23, 2015"

Read books, like Nature of Risk form Justin Mamis, and from Mark Douglas https://www.pdfdrive.com/stocks-books.h ... x-xHpopudY
Last edited by zoro69 on Jun 4th, 2020 11:14 am, edited 1 time in total.
Member
Apr 2, 2016
476 posts
308 upvotes
This is in 2008-2009... Should have had more cash savings to invest into the market after the crash happened. At the time I had most of my resources tied up in depreciating assets like cars.

Oh well, I did right by not having a penny in the market when things dropped off a cliff. I know a lot of my co-workers at the time were invested in "safe" barely interest producing money market funds, who ended up panic selling at 30% losses. My boss panic sold his under construction house at a six figure loss. Yeah, you get caught up in a crash, hold on tight.
Deal Expert
Aug 26, 2001
17546 posts
1093 upvotes
Richmond Hill, ON
stanleyinfrared wrote: When was your first market crash? What did you learn from it? What could you have done better? Share experiences.
September 2008.

Fun times.

I day traded back then, on Questrade. It was as horrible a platform back then, that it is now (apparently). Funny how 12 years of software development did not really improve anything.

I day traded AIG on one of the days they crashed big-time (I think it was Sep 16th) and managed to come out ahead - even though I had to use the "online chat" feature on QT to get a tech support person to fix my account. Face With Tears Of Joy When he saw what I was doing, he said he was going to try doing the same thing. Face With Stuck-out Tongue And Tightly-closed Eyes

Back then, I think I had the most fun with gold stocks.

When all was said and done, I had made enough money trading to get onto the overpriced "Toronto property ladder" and cover the downpayment on a nice condo.
And after that, I became a passive investor. :D

Edit: looks like I posted on RFD on the day that AIG crashed :D
Last edited by konfusion666 on Jun 4th, 2020 11:42 am, edited 1 time in total.
Sr. Member
Jun 27, 2006
889 posts
781 upvotes
Toronto
Establish your trading rules and stick to them.
Deal Expert
Aug 26, 2001
17546 posts
1093 upvotes
Richmond Hill, ON
In case you want to read the most active thread on this Forum back when AIG, Lehman Bros, etc. went under - here's a direct link to the September 2008 posts from that thread:

merged-another-bloody-red-day-tsx-469115/68/

Nostalgia!

Lots of posts by pitz in there too ... lmao
Deal Expert
User avatar
Apr 21, 2004
53330 posts
18205 upvotes
There will always be a next time so be prepared to switch to cash and then swing back locking in 10-20% or more gains.

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