Investment history can help with averages - -

[Jon39]

- - but is of no help with precise future timing.

Investors should expect a 30%+ crash about once a decade.

The UK Stock Market declines from 1980:

1987 - Black Monday. A huge decline over consecutive days, but that did follow a very large market increase from the begining of the year. The recovery was rapid and the year end finished in positive figures. A major decline at the time, but the dip can hardly be seen on todays charts. The event coincided with a huge storm in South East England. Thousands of trees were blown down and stock brokers were unable to travel to their offices.

2000 - Dotcom Bubble.

2008 - Global Financial Crisis.

2020 - COVID 19.

There is a worlwide list on Wikipedia.
https://en.wikipedia.org/wiki/List_of_stock_market...

Don't worry too much though, because history also reveals that investing in the stock market, has been the best way to accumulate wealth over the long-term. Well, unless you can start your own successful business.

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The fact is, major market downturns are a part of life as an investor. You can expect a roughly 10% dip about once a year, a 20% drop about once every four or so years, and a crash of 30% or more roughly once a decade or so.

But just as you can expect these dips -- even if you don't know when -- if history has anything to teach us, it's that you can reliably expect the market to recover, and then some. That's great news in the long run. With a long enough time horizon, even a 30% decline won't matter nearly as much as it might seem to in the moment.

Of course, that's not true for those nearing retirement. Generally, money you need within a few years shouldn't be invested in the stock market -- you don't want to be forced to sell shares to get money you need right after a 25% drop. These funds should be parked somewhere like a high-yield savings account, a money market fund, or invested in something like short-term Treasuries held to maturity. You're trading the potential for high returns for safety, predictability, and access.

Owning a diversified set of cash-generating businesses makes it easier to avoid panic selling

For the rest of your investments, the best approach is to own a diverse set of strong businesses that you believe in -- businesses with real cash flows, defensive moats (protection against direct competition) and competent leadership. And when a crash does come, if you are invested in companies like this, you will have a much easier time avoiding arguably the biggest mistake you can make -- panic selling. You'll instead be able to stay invested and look for stocks selling for bargain prices. Patient, steady investing has always been the key to success over the long haul.

[Nicetobenice]

Which AI app did you use?

[Derek Chevalier]

Jon39 said:

The UK Stock Market declines from 1980:

Any reason you started in 1980 and therefore didn't cover the 1970s stinker?

https://en.wikipedia.org/wiki/1973%E2%80%931974_st...

"The effect was worse in the United Kingdom, particularly on the London Stock Exchange's FT 30, which lost 73% of its value during the crash"

I recall Taleb used to say, "eat like a chicken, **** like an elephant", to describe an investing approach that 99% of the time generated small upsides and 1% of the time a huge downside (e.g., selling put options).

I appreciate that being 100% in UK equities has a different payoff profile, but much like being 100% in tech, not all investors are going to be able to cope with 70-80% drawdowns and will effectively have a small chance of blowing up their plan if/when we experience another 70s horror (for UK stocks) or .com bust (for tech).