Takeaways From 150 Years of Stock Market Crashes

The Morning Star article, "What We've Learned From 150 Years of Stock Market Crashes" by Emelia Fredlick and Gabe Alpert reveals that the US stock market always recovered from market crashes and went on to new highs. One US dollar invested in 1871 in a hypothetical US stock market index would have grown to $35,082 by the end of February, 2026 despite 19 market crashes(a decline of 20% or more) over the period.

The fear of market crashes may scare away more women than men from equity investing, but among women who do invest, behavior in volatile markets looks less reactive than men's: more buy-and-hold, fewer panicky trades, more attention to diversification, and downside protection.

Investors who adopt a long-term and disciplined approach, and consciously manage market risk by design when constructing their portfolios, think Modern Portfolio Theory(MPT), better protect themselves against steep declines, while enjoying all of a recovery's upside. The creation, or updating of an Investor Policy Statement(IPS) or Personal Investment Policy(PIP), which describes in writing your overall investment approach, including goals, time horizon, risk tolerance, asset allocation ranges, rebalancing rules, and what you will and won’t invest in, can provide an objective and rational long-term perspective, and calming influence during the next market storm.

Noah built the Ark before the rain. What you choose to do now will determine whether you'll profit, or panic when the next market crash arrives.