Crash
Also called: bear market, market crash, correction
A steep fall across the whole market at once, rather than one company stumbling.
Not one business failing — the entire haystack falling together for a while. “Bear market” is the common name for a drop of roughly 20% or more.
It feels like a verdict on your future. Historically it has behaved more like violent weather: frightening, recurring, and so far always temporary. Markets have recovered and gone on to new highs every time to date, though nobody can promise how long any particular recovery takes, and “so far” is doing real work in that sentence.
The genuine danger is not the crash. It is selling during one, which converts a temporary decline into a permanent loss and then requires you to judge when to return — a second decision most people get wrong, because the bottom is only visible afterwards.
If you are still contributing, a crash is not bad news at all. Your monthly amount simply buys more units at lower prices, and those units participate in whatever recovery follows.
Decide what you will do about crashes while things are calm. Nobody decides well mid-fall.
Words on this page
Related terms
Covered properly in Learn.
This term appears in the glossary of The Quiet Fortune, Volume I.