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Stock Market Crash Don’t Panic, Get Rich Instead #stocks
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00:00Hey there! So you want to invest and get rich? Great! But now your portfolio is red, red, minus,
00:08minus. Every time you check, it's worse. The news screams about crashes, recessions,
00:15and corrections. But what does it all mean? Should you panic? Buy more? Sell everything?
00:21Or just close the app and cry? Before making any moves, remember that many market crashes
00:27in history have created new millionaires. This might be your chance to become rich.
00:34What? Really? Then how do you do it? Before we start, let's first understand,
00:39why do stock markets crash? Is this normal or should you be worried? How do you survive a crash?
00:47And most importantly, how do some profit while others lose everything? In this video,
00:54we'll cover everything you need to know about stock market crashes. Let's get started.
01:00Section 1. Why do stock markets crash? To understand stock market crashes,
01:05we first need to know why they happen. A crash is when the stock market suddenly drops fast,
01:12meaning many stocks fall sharply. This usually happens for three reasons. Bubble bursts,
01:19bad economy and black swan events. Let's break them down. The first is bubble bursts. You've probably
01:27heard the word bubble thrown around in the stock market. But what does it actually mean? A bubble
01:34happens when stock prices go way higher than they should, usually because of hype, not real business
01:41growth. And when investors realize this, they all sell the stocks and the stock's prices drop
01:48hard. A real world example is the dot-com bubble in the early 2000s. The internet was the new hype
01:57and investors threw money at any company with dot-com in its name, even if it had no profits and no real
02:05business model. At its peak, over 400 internet companies went public. And the NASDAQ, the tech-heavy
02:13index prices jumped by over 800% in total. But when people realized most of these companies were not
02:22making money, the investors sell all their stocks and the bubble popped. The NASDAQ, a tech-heavy stock
02:30index, crashed nearly 80%, wiping out trillions of dollars in market value and needed 15 years to return
02:39to its original price before the bubble. That's how bubbles work. Hype inflates prices, reality pops
02:47them. Then the second reason is a bad economy and certain policies. Bad economic condition, like when
02:56inflation is too high, makes food and rent more expensive. People cut back on spending, which means
03:03businesses make fewer sales. When a company earns less, investors expect lower profits in the future.
03:11So, they sell the stock and the price goes down. If this continues, it can lead to a recession,
03:18when the entire economy shrinks. Production slows down, spending drops, and investors panic, causing the
03:27stock market to fall even further. That's why recessions are often linked to stock market crashes.
03:35Sometimes, certain policies can also cause crashes. When the inflation rate is too high, the central bank
03:43raises interest rates to slow down the inflation, making loans more expensive. Businesses that need
03:50money are struggling, so they cut production. People start saving money and spend less, which spreads panic
03:58and pushes stocks down even more. And that's why every time this guy announces interest rate changes,
04:06investors are worried. If rates go up, loans get more expensive for businesses, and stocks usually drop.
04:14If rates are cut, loans get cheaper, businesses have more money, and stocks usually rise.
04:23The third is Black Swan events. Black Swan is just another name of unexpected disasters,
04:30like wars, pandemics, terrorist attacks, financial scandals and more. These kinds of shocks make people
04:37worry about the economy, which makes people get scared and sell their stocks as fast as possible,
04:44causing prices to crash. A real example is the 2020 COVID-19 crash. Nobody saw the pandemic coming,
04:53and within weeks, global markets fell by over 30% because investors panicked about businesses shutting
05:01down and the world economy collapsing. So, these three are the main reasons behind a stock market crash.
05:09Of course, there are other factors too, like too much leverage, margin calls, or even herd behavior.
05:18But we won't go deep into those since I want to keep this video simple. Now, we know why stock markets crash.
05:25But the real question is, is this normal or should you be worried? Let's find out in the next section.
05:32Section 2. Are stock market crashes normal? Yes, stock market crashes are normal. The stock market doesn't
05:41just go up all the time. It moves in cycles with ups and downs. If you're investing for the long term,
05:49you need to understand that crashes are part of the game. In fact, for traders, these ups and downs are
05:56opportunities for them to buy low and sell high. Because if stocks only went up, everyone would just
06:04invest long term instead of trading. Believe it or not, history shows that the market follows a repeated
06:11pattern of market downturns. The first is pullbacks, when stock prices fall around 5 to 10%.
06:19This happens almost every year and is considered normal market movement. The second is corrections,
06:28when stock prices drop 10 to 20%. As the name suggests, corrections happen when investors realize
06:36that the stock prices are overpriced and corrected back to their fair prices, usually every 1 to 2 years.
06:44The third is bear markets, when stock prices fall around 20 to 40%. This usually happens every 5 to 6 years,
06:54often due to economic slowdowns or rising interest rates. Because the economy isn't always good like a
07:01fairy tale. And the last is crashes, when stock prices drop 40% or more. These happen about once every 10 to 20
07:12years, usually due to black swan events like financial crisis or global disasters. So this is the table of
07:21differences. Feel free to take a screenshot. History has proven again and again that the market bounces back
07:28and even gets stronger after every crash. In 1973, the oil embargo crash set markets down by nearly 50%
07:39and it took about 7 to 10 years to fully recover. During Black Monday in 1987, the New York Stock Exchange
07:48crashed 22% crashed 22% in one day but recovered in 2 years. During the 2008 financial crisis, the S&P 500
07:59crashed nearly 50% but eventually recovered in 4 years. During the 2020 COVID-19 crash, the New York Stock
08:08exchange dropped 30% in just 5 weeks but fully recovered in 4 months. Different crashes but the same pattern.
08:19Market falls and come back even stronger. So, who lost money? Those who panicked and sold. And who made
08:28money? Those who stayed calm and held strong stocks. But some people still panic and say historical
08:36performance doesn't guarantee future results. What if this time, the crash is different and never
08:42recover? How do we know? That's not completely wrong. But there are indicators to help you know when a
08:51crash is just part of the cycle and when you should actually be worried. Crashes are normal if you see the
08:59businesses are still operating. People still can spend and do leisure. And some actions have been made to
09:06stabilize things. Then the crashes most likely will recover. But this mainly applies to big, stable
09:14economies like the US. In smaller or unstable countries, crashes can take longer or recover
09:21differently. So, you need to understand your country's condition. You should only start to worry if
09:28the entire economy breaks down. Like if businesses keep failing, banks go bankrupt, people can't access
09:36their money, and the country defaulted on its debt. Those situations are extremely rare. But if they happen,
09:44then yeah, that's the kind of crash that's much harder to bounce back from. Now you understand which
09:51crashes are normal and which ones are not. So, your next question is, how to survive during stock market
09:59crashes? Well, let's find out in the next section. Section 3. How to Profit from a Stock Market Crash
10:07A stock market crash might seem like the worst time to invest. You might be wondering, how do you even
10:14survive it? But here's the surprising part. Many people actually make huge profits during a crash.
10:22For smart investors, a market crash is one of the best opportunities to build long-term wealth.
10:30Like Warren Buffett said, be greedy when others are fearful. So, how do you actually do that?
10:37Let's go through some common mistakes and what you should do instead if you want to profit during a crash.
10:44The first mistake is panic selling. When people see their portfolio turning red, their first instinct
10:52is to sell everything before it drops more. But here's the truth. You haven't lost money unless you
11:01sell. A stock might be down, but it still has a chance to recover. But if you sell at a loss, that loss
11:10becomes real. If you invested in strong, profitable companies, there's usually no reason to sell just
11:18because the market is down. Instead of panic selling, stay calm, stay informed, and focus on the long term.
11:27The second mistake is trying to time the bottom. Some investors try to predict the lowest point of a
11:34crash and wait for the perfect moment to buy. But the problem is, how accurate can you predict the
11:42lowest point? Many people wait too long and miss the lowest point, while others buy too soon, thinking
11:50prices won't drop further, only to see them fall more. Instead of guessing, a better strategy is dollar
11:59cost averaging or DCA. DCA means investing a fixed amount regularly. So you buy more when prices are low
12:09and less when prices are high. This removes the stress of trying to time the market. And as long as
12:16you buy strong, profitable companies, DCA should be a worry-free approach, as long as you're confident in
12:24the company's long-term strength. The third mistake is buying bad stocks just because they're cheap.
12:32If you noticed, I keep emphasizing buying strong, good, and profitable companies. Why? When stock prices
12:40crash, it's tempting to buy anything that looks like a bargain. But not all companies recover. Some
12:47businesses fail completely and their stocks never bounce back. That's why it's so important to
12:54focus on strong, profitable companies. Those with low debt, solid earnings, history of surviving tough
13:02times, and good prospects. During a crash, great companies become cheap not because they're bad,
13:09but because everyone's panicking. For example, before the 2008 financial crisis, Amazon's stock was at
13:17around $90 per share. If you had $1,000, you could only buy 11 shares. When the crash happened,
13:26Amazon dropped below $40 per share. Now, with that same $1,000, you could have bought 25 shares instead.
13:36If you had done your research and believed Amazon was a strong, profitable company with good future
13:42prospects, you could have bought it at that price. A few years later, Amazon rebounded and skyrocketed,
13:50reaching over $3,000 per share by 2021. That's over 8,000% growth. That means those 25 shares from the
14:01crash would have been worth over $75,000. And if you're interested in investing, Moomoo is a good
14:09platform to try. Click the link below to get up to 15 free stocks when you deposit and enjoy 8.1% APY
14:17on idle cash. Then the fourth mistake is not diversifying. Some investors put all their money
14:25into one stock or sector, thinking it's a sure bet. But when a crash happens, some industries fall
14:33harder than others. Smart investors spread their investments across different sectors,
14:39like tech, healthcare, consumer goods, and utilities, so that if one area crashes,
14:45others can help balance the losses. Some even diversify into non-stocks, like bonds,
14:52commodities, or international stocks to protect against stock market crashes.
14:58If picking individual stocks sounds hard, then you can consider buying funds, like ETFs or index funds,
15:06which make it easier by automatically spreading your investment across multiple stocks. This way,
15:13you don't have to pick individual companies yourself. If you want to understand more about funds,
15:19check out my other video about ETFs, mutual funds, and index funds. Link in the description.
15:25The last mistake is FOMO, or fear of missing out. When panic spreads, people blindly follow what others
15:35are doing. If everyone is selling, they sell. If the news is predicting doom, they believe it. But even
15:43legendary investors like Benjamin Graham and Peter Lynch have said that even Wall Street professionals
15:49cannot predict the market perfectly. So make sure you understand what you're buying by doing your own
15:56research. And if you're still unsure, it's totally okay to speak to a financial advisor. But either way,
16:04you should always understand what you're investing in. Never blindly follow anyone, not even the pros.
16:11Like Warren Buffett says, never invest in something you don't understand.
16:16Now those are the common mistakes and smart actions for beginners. But there's one more strategy that
16:24some professionals use to profit from a crash, which is called short selling. It's when you bet that a
16:31stock's price will drop. For example, imagine your friend owns a stock worth $100. You borrow it,
16:40sell it for $100 and wait. If the price drops to $70, you buy it back, return it to your friend and keep
16:49the $30 difference. But if the stock rises instead, say to $120, you'd have to buy it back at a loss.
17:00Some legendary investors made billions shorting the market, but it's extremely risky. That said,
17:07I'm only explaining it for knowledge. I don't recommend it, especially if you don't fully
17:13understand how it works. So in conclusion, a stock market crash feels scary, but it's just part of
17:20the cycle. Historically, the US stock market has always recovered and even reached new highs after
17:28crashes. While no one can predict the future, past patterns show signs that recovery is likely,
17:35unless the economy completely collapses. The key to surviving and profiting from a crash
17:42is staying calm, avoiding panic selling, doing thorough research, and buying quality stocks
17:49at a discount. Panic sellers lose, but smart investors turn crashes into their biggest wins.
17:57So when the next crash happens, don't fear it, but be ready.
18:03If you want me to make other videos explaining these topics, please like and subscribe.
18:08Thanks for watching.
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