Stock market crash: How does this dip compare with others?
We compared the S&P 500's live market value with the worst market crashes of the last 50 years.
The beginning of 2022 has seen a bear market take hold as global stock markets dip amid events like Russia’s invasion of Ukraine and many central banks increasing interest rates. This has seen everyone from inexperienced retail investors through to grizzled city veterans re-evaluate their portfolios and wonder if this is a great buying opportunity or there is more pain to come.
In order to put this current market dip into perspective, we are tracking the S&P 500‘s value every day and comparing it to the worst market crashes of the last 50 years.
Is this a bad stock market crash?
The worst market crash of the last 50 years was the financial crisis that lasted between 2007 and 2009. The lowest point came after 351 days of trading when the market had fallen by 55.5% from the point when the crash first started. When compared to this, the current market dip is currently nowhere near as bad. However, it has only been going on for a few months.
Is now a good time to buy stocks?
Despite the possibility of the market dropping further, half (48%) of British investors polled by Finder said they planned to buy the current dip. A further 4% of Brits who don’t invest, plan to buy the current market dip as well
Across all Brits, this means that over 1 in 10 Brits (12%), or an estimated 6.2 million people, plan to “buy the dip” if the share market falls by at least 20% in 2022.
Not everyone is tempted to invest now, however. According to the survey, 4 in 5 Brits don’t currently invest and won’t be tempted to start because of this dip, while 52% of investors are also not planning to pick up more stocks because of the drop in the market.
Finder’s investing writer, Zoe Stabler DipFa, says instead of trying to time the market, retail investors should consider long-term investment strategies.
“A sensible strategy is to invest regularly instead of sporadically. This is called dollar-cost averaging and means you reduce the risk of timing things badly. In theory, this means that you aren’t putting all your eggs in one basket and you are likely to end up investing at good times as well as bad times.
“It can seem tempting to invest when markets are dropping, but there is no telling when a market crash will end and you could end up experiencing heavy losses early on if it continues to fall.
“As our chart shows, the market has plenty of room to continue falling if global issues like the Russian invasion of Ukraine don’t get resolved soon and central banks continue to increase interest rates. On the other hand, it could bounce back quite quickly – there is just no way of accurately predicting it.”
- Finder used Google Survey to poll 2,024 British Internet users. Due to the varying Google infrastructure in each territory, not all surveys were nationally representative. Where a nationally representative sample was unavailable, a natural fall/convenience sample was used. For these, Google didn’t use stratified sampling but did apply weights to the survey results if the demographics of the survey respondents didn’t vary too far from demographics data. The details of Google’s survey methodology can be found here.
- United Kingdom: A convenience sample of 2,024
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