magnified money: 2020 recession explained: past market crashes & investment strategy

Click “Show More” to see my Favorite Financial Tools MY FINANCIAL TOOLS Credit Cards BEST Credit Cards: ---------- Chime Fully Online Banking Sign-Up for Chime HERE: Chime Credit Builder HERE: ---------- SoFi Complete Money Management Checking & Savings - Credit Card - Invest - Budgeting - ---------- Bankrate | Checking, Savings, and CDs Checking - Savings - CD - ---------- Wealthfront Automated Investing First $5,000 Managed for FREE - ---------- Current Card Current | Modern Banking App - ---------- MY CAMERA GEAR My Camera: My Microphone: My Lights: Music License Credit: "I'm So" - Andrew Applepie The awesome music is by Andrew ApplePie Check Out Their Work At: Music License provided by Music for Vlogs Just over one month ago the S&P 500 hit a record high of 3386 on February 19th. On top of this record high, unemployment had reached record lows and other than some minor discussion surrounding a particular illness starting in China, things were looking pretty good for the first quarter of 2020. But here we are just over a month later with the S&P 500 and other market indexes plummeting over 30% and just yesterday we found out that nearly 3.3 million Americans have filed for unemployment which is by far a record in the United States. So let's look at the past bear markets and put this current market crash into perspective. So for the first major market crash in the United States, we have to go way back to the year 1907 When the stock market lost 50% of its value following a major earthquake in San Francisco California. Insurance companies quickly became bootstrap for money meaning that large amounts of gold were withdrawn and lending requirements became much more strict. Very quickly everyday consumers began pulling all their money out of the banks in fear that they would not be able to access their money if the bank failed. For nearly two decades the market went on without any major correction until 1929 at the start of the Great Depression. During what we now know as the Roaring Twenties, money essentially grew on trees and individuals had begun borrowing exuberant amounts of money in order to invest them in the market which was skyrocketing at the time. This led to an extreme amount of borrowing and therefore debt And despite the Federal Reserve warning borrowers that this level was unsustainable, an unknown catalyst caused panic selling leading to the greatest depression in United States history formerly known as the Great Depression. This didn’t end until the infamous Black Monday crash of 1987 when the Dow Jones Industrial index lost 22% of its value in a single day. Thankfully this was largely a fluke event caused by the relatively new automatic trading systems. As certain stop-losses were triggered, the automated systems began to sell which caused the price to go lower which triggered more stop losses and more sales to be made. The next bull market lasted until the burst of the .com bubble in 2001 when many of the internet companies promising the new way of the future collapsed due to their inability to actually make any money. However, the few companies that survived saw massive success and some continue to be leaders in the tech industry today. After a 44% decline caused by the .com bubble burst, we saw a five-year expansion with a 108% growth that was halted by the Great Recession of 2008 that all of us know pretty well. Right now you are likely in one of two camps as an investor. You either have been sitting on cash this whole time and are wondering when you should buy back in or you have been holding Investments through this roller coaster and are currently wondering if you should cut your losses or hang on for a rebound. First of all, this too shall pass and if anything you should see the current situation as one of the best buying opportunities in a very long time. The best time to buy stocks was decades ago but the second-best time it's right now. Magnified Money may receive compensation for sending traffic to partnered sites. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.