As you can see, there is more to preparing for a market crash than making a stock market crash prediction. “Experts” predict crashes all the time, and most of the time they get it wrong. If you listen to all these crash predictions, you will end up losing out on the upside. And yet, you should never be in a position where a crash will wipe out your portfolio or brokerage account. To prepare for a crash, you should make sure your portfolio is diversified, and that you don’t have too much of it allocated to high beta and growth stocks.
After a one-day recovery on October 30, where the Dow regained an additional 28.40 points, or 12 percent, to close at 258.47, the market continued to fall, arriving at an interim bottom on November 13, 1929, with the Dow closing at 198.60. The market then recovered for several months, starting on November 14, with the Dow gaining 18.59 points to close at 217.28, and reaching a secondary closing peak (i.e., bear market rally) of 294.07 on April 17, 1930. The following year, the Dow embarked on another, much longer, steady slide from April 1931 to July 8, 1932, when it closed at 41.22—its lowest level of the 20th century, concluding an 89 percent loss rate for all of the market's stocks.
This was an attempt to hedge a 20% decline in $100,000 of equities so it performed pretty well in our hypothetical crash, protecting against nearly the entire loss. And you could also work backwards, as Spitznagel suggests in the second strategy described above, using this calculator. This way, you might say I want to protect against a $20,000 loss so I need to buy 61 put options ($20,000 divided by $328.10) rather than just the 55 we bought using the first strategy.
It’s beyond Black Monday. The next stock market crash will combine the effects of Black Monday with the tech bubble of 1999-2000 and the recession that resulted from the crash of 2007-2008. The Shiller CAPE ratio, which measures a stock’s performance by comparing its price against earnings over a 10-year period, has reached the very point when Alan Greenspan pronounced his famous “irrational exuberance” speech. (Source: “The stock market’s valuation is back to the point where Greenspan warned of ‘irrational exuberance’,” CNBC, October 31, 2017.)
Homeowners are not taking as much equity out of their homes. Home equity rose to $85 billion in 2006. It collapsed to less than $10 billion in 2010. It remained there until 2015. By 2017, it had only risen to $14 billion. Obamacare is one reason for that. Bankruptcy filings have fallen 50 percent since the ACA was passed. In 2010, 1.5 million people filed. In 2016, only 770,846 did. 
Although this latest round of fiscal and monetary stimulus has not had the anticipated economic effect to date, it has produced a negative effect on the Chinese yuan. Leaving some to wonder if China is finally losing control over its currency. In August 2015, an unexpected devaluation in the yuan led to a capital flight as Chinese companies, citizens and investors sought to protect themselves from further declines in the currency. If the yuan weakens too quickly again—either naturally or by another planned devaluation—this would add even more chaos to the already fragile global markets.
Its pretty obvious she's completely failed. She may as well have said she never wrote the current Brexit deal, Barnier did or Merkel did. In more enlightened times her head would be on a spike by now, down by the Thames. But what do we expect from just the latest traitor to Sovereignty on the list, that includes: Heath, Major, Brown and the rest . . We need a new broom to sweep all this rubbish away, once and for all . .

Indian stock markets witnessed a steep and sudden sell-off in the afternoon deals on Friday. Rajat Sharma of Sana Securities told FE Online that stock markets are "extremely overvalued" and Sensex can fall even 2,000 points from here while NSE Nifty can correct by about 1,000 points. "Nothing has changed fundamentally, I mean we have the same macro-economic situation, etc, but when a sell-off happens, nobody can predict, Rajat Sharma said further. 
The Indian rupee strengthened further against US dollar in the early afternoon deals on Friday following the sustained weakness in the crude oil prices. The domestic currency (rupee) extended morning gains on Friday and hit a fresh 2-week high at 71.7663, up 62 paise per unit US dollar, the Bloomberg data showed. The rupee is trading 120 paise higher from the all-time low of 72.97 apiece US dollar. Earlier on Tuesday this week, the rupee went very close to hitting 73/$ and made a record low at 72.9675 against US dollar. 

Since February 2013, the broad market has three circuit breakers tied to the performance of the S&P 500 index. If it loses 7%, 13%, or 20% of its value compared to the previous days close, trading halts for a period of time. If anything can be considered a stock market crash, it's hitting these circuit breakers.Remember, Black Monday (October 19, 1987) saw the DJIA lose 22.6% in a single day.
Recently, Netherlands-based “Big Four” auditor KPMG has released another bullish stance on crypto, claiming that the industry needs institutional investors’ participation in order to “realize its potential.” Earlier last week, CoinShares CSO Meltem Demirors claimed that the the recent collapse of the markets is caused by institutions“taking money off the table” due to Bitcoin Cash’s (BCH) hard fork.
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Hi Gord. Thanks for this informative piece. Its best info I’ve found on the net. I plan to invest in a $250K – $300K property in Ontario without living in it as I am in UAE. Which town of Ontario do you suggest I should invest in to keep my rental income coming, along with chance of property appreciation. Toronto is surely very expensive now so we are think about these towns: Oshawa, Guelp, berries or Milton…what would you do if you had this much of savings and wanted to invest in Ontario Market for 2 years
I don’t even know how many records I own, but it’s in the thousands. I have records, tapes, CDs, and computer files going all the way back to the 1880s. I even have one recording from 1869. A scientist was studying sound waves and recorded a woman singing “Clare De Lune.” He recorded it as wavy lines on a soot-covered paper. Someone recently scanned it and converted it back into sound. It doesn’t sound very good, but it’s amazing that you could retrieve sound from marks on a sooty piece of paper.

To be able to make good decisions amid a stock market crash, investors will need to be able to remain calm. As Buffett has said, "Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."


You can cushion the effects of a crash by allocating to defensive and blue-chip stocks, bonds, gold and cash. Having some cash in your portfolio also allows you to buy back into the market at lower levels. The current stock market is fairly expensive, but there are no signs of an imminent crash. However, that doesn’t mean market conditions can’t change quickly. That’s why you should always be ready for the next crash.
One of the reasons Warren Buffett’s predictions tend to have more weight is that they’re less based on outright fortune telling and more on a series of clear indicators. In other words, the Warren Buffett Indicator works like a barometer. It does not predict rain, per se, but it does tell you whether you should look for an umbrella in the closet to keep it handy for the next day.
The Fed underestimated the size and impact of the mortgage-backed securities market. Banks had hired "quant jocks" to create these new securities. They wrote computer programs that sorted packages of mortgages into high-risk and low-risk bundles. The high-risk bundles paid more but were more likely to default. The low-risk bundles were safer, but paid less.
If we, in short order, enter into a recession it will be directly related to the bail outs and QE put in place under Obama’s watch. They did what they thought was best, but much of the benefit of all this asset inflation has not gone to the average person and it has put us in uncharted territory as we begin to embark on an unwinding journey in the Fall.
People who were caught in the 2008 crash are spooked that a 2018 bubble will lead to another crash. But that crash was caused by forces that are no longer present. Credit default swaps insured derivatives such as mortgage-backed securities. Hedge fund managers created a huge demand for these supposedly risk-free securities. That created demand for the mortgages that backed them.
If we, in short order, enter into a recession it will be directly related to the bail outs and QE put in place under Obama’s watch. They did what they thought was best, but much of the benefit of all this asset inflation has not gone to the average person and it has put us in uncharted territory as we begin to embark on an unwinding journey in the Fall.
Now is the time to make sure you have a portfolio that you could live with through a crash. A typical crash will feel very different if you are 100% invested in stocks, than if you have some of your portfolio invested in bonds and other assets. The time to work out the right allocation for you is now, if you determine that you should not be completely in stocks but would rather have a 60%/40% stock/bond allocation, then it's critically important to determine that before a crash occurs. If you don't, you'll experience the worst of both worlds. You'll likely see the greatest losses during the crash, but also fail to benefit fully from any recovery. If you prepare ahead of time, you'll be better able to ride out any market events.
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