How I Made $150K in the Last Stock Market Crash (And What I’m Doing Now)

Summary

In this video, the speaker reflects on their experience as an investor during stock market downturns, emphasizing how they've profited from market corrections and crashes. They highlight the importance of staying calm, making rational decisions, and taking advantage of opportunities during volatile times. Through personal stories of surviving the 2020 COVID-19 crash and the 2022 market dip, they share how staying patient and focusing on long-term investments like ETFs and stable stocks has led to significant financial growth. The speaker encourages viewers to remain steady, avoid emotional reactions, and continue investing through market fluctuations.

Takeaways

• 😀 Market corrections (10% decline) and recessions (20% decline) happen regularly and are a normal part of the investing cycle.
• 😀 Emotional control is crucial during market downturns—resisting the urge to panic sell is key to making successful investments.
• 😀 A long-term perspective is essential—investors who remain calm during corrections can seize opportunities that others might miss.
• 😀 Dollar-cost averaging (DCA) helps mitigate the emotional impact of market fluctuations and allows investors to take advantage of lower prices during downturns.
• 😀 Historical data shows that the S&P 500 typically experiences a correction every 12-18 months, and most corrections recover within 3-6 months.
• 😀 Buying during crashes can lead to significant gains—investors who buy in when the market is down often see their portfolio grow as the market recovers.
• 😀 The COVID-19 market crash was a major opportunity for investors who stayed the course, with many seeing their portfolios grow by hundreds of thousands of dollars.
• 😀 Stocks and ETFs, especially broad market funds, tend to provide stable long-term growth, while speculative stocks or day trading can be much riskier.
• 😀 Warren Buffett's investment strategy focuses on patience and long-term value—despite holding significant cash, he remains heavily invested in stocks for the long-term.
• 😀 Staying invested, rebalancing portfolios strategically, and reinvesting dividends are all crucial moves that help build wealth over time, even during volatile periods.

Q & A

What is the current state of the stock market according to the speaker?

The stock market is currently experiencing a decline. The S&P 500 is down about 9%, the NASDAQ is in correction territory, down 12%, and Bitcoin has dropped more than 20%. The fear and greed index is in the 'extreme fear' zone, and people are panicking.

How did the speaker manage to increase their net worth during a previous market crash?

During the last market crash, the speaker's net worth increased by over $150,000 because they remained calm, avoided panic selling, and took advantage of the market downturn by buying more investments. This was a result of their patience and strategic actions.

What is the speaker's view on market pullbacks?

The speaker sees market pullbacks as a healthy and normal part of the investing process. They emphasize that it is unrealistic for stocks to continuously rise without any form of correction, and they are not worried about the current pullback.

How often do market corrections occur, according to the speaker?

Market corrections, which are defined as a 10% or more decline, happen about once every 12 to 18 months on average in the S&P 500. Most corrections typically recover within 3 to 6 months.

How did the speaker manage their emotions during market crashes in the past?

The speaker recalls being very stressed and panicked during previous crashes, particularly the COVID-19 market crash. However, they learned to control their emotions by seeking advice from experienced investors and sticking to a long-term strategy.

What did the speaker do during the COVID-19 market crash to capitalize on opportunities?

During the COVID-19 crash, the speaker continued to invest, sold personal items to raise more cash, and bought into ETFs and stocks at discounted prices. They focused on dollar-cost averaging, which helped them capitalize on the market rebound.

How did the speaker's investments perform after the COVID-19 crash?

After the COVID-19 crash, the speaker's investments performed very well. Their net worth grew from $35,000 to over $100,000 by the end of 2020, primarily due to market growth and the speaker's strategy of buying more during the downturn.

What lesson did the speaker learn from the 2020 market downturn?

The speaker learned that staying patient, avoiding panic selling, and taking advantage of buying opportunities during downturns are crucial for long-term investment success. Their experience taught them not to react impulsively to market fluctuations.

What is the speaker's current investment strategy?

The speaker's current investment strategy involves dollar-cost averaging, staying invested in ETFs and stable assets, and reinvesting dividends. They avoid trying to time the market or pick individual stocks, focusing instead on long-term growth.

How does the speaker feel about short-term market fluctuations?

The speaker is largely unemotional about short-term fluctuations. They acknowledge that these fluctuations are normal and healthy, and view them as opportunities to buy more at discounted prices rather than a cause for panic.