How Often Does the Stock Market Crash?

Stock market crashes are often viewed with fear and uncertainty. The dramatic drops in prices can wipe out billions in market value in mere hours. But how often does the stock market actually crash? And should you worry?

Let’s break it down, explore the history, and offer smart ways to prepare and thrive during turbulent market times.

What Is a Stock Market Crash?

A stock market crash is typically defined as a sudden and significant drop in stock prices across a major section of the market. These crashes are often fueled by panic selling, economic distress, geopolitical tensions, or financial bubbles bursting.

How Often Do Crashes Occur?

While crashes feel unpredictable, market data shows patterns. Historically, a significant market correction (a drop of 10% or more) occurs approximately every 1 to 2 years, while a major crash (a drop of 20% or more) happens roughly once a decade.

Historical Examples of Market Crashes

• 1929 – The Great Depression: Market lost nearly 90% of its value over 3 years.
• 1987 – Black Monday: Dow Jones fell 22% in one day.
• 2000 – Dot-com Bubble Burst: Tech stocks plummeted.
• 2008 – Financial Crisis: Triggered by mortgage-backed securities collapse.
• 2020 – COVID-19 Crash: Markets plunged over 30% in weeks.

Despite these crashes, the market has consistently recovered and reached new highs over time.

Should You Fear Market Crashes?

Short answer: No—if you’re investing for the long term.

Stock market crashes can be emotionally challenging, but for disciplined investors, they also present opportunities to buy quality assets at lower prices. Historically, those who stayed invested or bought during downturns were rewarded in the long run.

To navigate volatility with confidence, it’s crucial to learn how to assess stocks and understand your risk tolerance.

👉 Learn how to analyze stocks before buying with this essential guide.

How to Prepare for a Market Crash

1. Diversify Your Portfolio – Spread investments across sectors and asset classes.
2. Have a Long-Term Mindset – Markets rise over time despite short-term setbacks.
3. Build an Emergency Fund – Keep 3-6 months of expenses in a liquid account.
4. Stay Educated – Understand what you own and why you own it.

If you're just getting started, picking up the right knowledge is crucial.

📘 Check out the best investing books to read and boost your financial IQ.

Stock Market vs. Forex: Which Is More Stable?

If you’re comparing investments, you might be wondering how the stock market stacks up against the forex (foreign exchange) market.

While both can be profitable, stock trading is generally less volatile and more transparent than forex.

💡 Curious? Here's a deeper breakdown of why stock trading is better than forex.

If forex still interests you, arm yourself with the right material:

📚 Best Forex Trading Book Deals for those diving into the world of currencies.

Final Thoughts: Crashes Are a Feature, Not a Flaw

Stock market crashes are inevitable—but they don’t mean doom. With the right strategies, education, and patience, you can navigate these downturns and come out stronger.

Invest smart, stay informed, and remember: time in the market beats timing the market.