Back on October 29, 1929, the worst stock market crash in our country's history took place. Why? Because between 1921 to 1929 the Dow Jones rose from 60 to 400. Isn't that a good thing?
Not this time.
You see, this caused people to buy stocks at an alarming rate, considering it an unbelievably safe investment. Thus, the market became overheated. The Feds tried to raise the interest rates in response to this, but the action didn't work. People got rich. They continued to buy stock.
Unfortunately, when the crash occurred-remember that anything that seems too good to be true probably is-most people's money was invested in the stock market. Thus, it was gone.
Hence, The Great Depression had begun.
How to Survive a Stock Market Crash
Here's the number one little nugget. Don't have all of your money tied up in high-risk American stocks. Those that didn't back in 1929 weren't hit as hard. In other words, have your money in foreign stocks, bank accounts, real estate, hard investments, and bonds so if stocks crash it doesn't guarantee you're in immediate trouble. Further, it's always a good idea to have a significant amount of cash on you in a safe place at home (this will be brought up again later in this article). After all, when it all hits the fan cash is a good thing to have (especially considering that terrorists would probably love to hit us during a terrible stock market crash).
But that's another story.
By the same token, it's probably important to remember that Dow Jones and S & P falls are the rule, not the exception. In other words, they're healthy to an extent. For example, during the terrible slide of 1973-74 (when Richard Nixon was President) the S&P 500 index lost 48 percent of its value. On top of it all, Nixon was out as President, oil prices went through the roof, and inflation flew up to 12 percent.
Then came the rebound. Namely, in 1975 there was a 37.2 percent return and in 1976 a 23.8 percent gain.
So panicking is never good. A couple things you can do instead ...
Seek advice: First become familiar with sound financial investment strategies for making it through rocky markets.
Talk to expert(s): For example, Dan Speer Fisher Investments suggest the following strategy. For long term financial stability you need to understand the options that are available and to diversify within these options. Betting on short term gains may seem good in the short term, you want to look at the overall reach of your investments to make it through a collapse or depression.
Byproducts of a Stock Market Crash
Remember that if a major crash occurs, gas prices will go up, people will lose jobs, food prices will rise, and the same with oil. Now imagine if you lost your job and all of that took place on top of it.
That wasn't rhetorical. Really, you should imagine it. Because if you do then it might lead you in the right direction. Along with this, here are some ideas.
Safeguard Yourself in Advance
Get rid of debt: This is idea number one. Pay off those credit cards. Pay off all loans that you can. If you can start paying off more of that mortgage, now may be the time to do it as well. Those with the least amount of debt will be affected the least when the crash occurs.
Have cash on you: If such a crash were to occur, banks would be rendered useless for a period of time. In other words, say goodbye to checks and credit cards. Thus, having a significant amount of cash in small bills (people won't have change) would be wise.
Invest in hard assets: We're talking gold and silver bullion and coins here. These will endure beyond the problem and can also be used under terrible circumstances if needed.
The Final Thing to do in Preparation for a Stock Market Crash
Be ready to survive. There will be civil unrest. Terrorists might choose just that time to strike. In other words, chaos could ensue.
Think about an alternate fuel source for heating and more. Do you have the kind of warm clothing you might need to survive? Do you have dry foods and other non-perishable food items that can last for a long period of time? How about water supplies?
Also, make sure that you have proper food storage bins, etc.
Just in case things get really bad, it would be wise to have tools for hunting and fishing on hand, as well as knowledge and experience in the wilderness. This includes ways and resources (and an area of land) for raising your own food. Because the time may come that stores in your area close there doors for good.
Better yet, get yourself a Bible. This sounds a lot like things said to come in the "last days", and if that's the case there's only going to be one way out of this, and that's through Christ and an understanding of just what exactly is taking place in the world.
Purchase Emergency Supplies
What emergency supplies should you have on hand? See: Suggested Emergency Supplies.