What to do before a stock market crash?

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The memory of the different falls in the equity markets is still present in the minds of many investors, especially the oldest ones. They still have in their memory all the savings that these violent stock market movements took from them and that all international stock markets depreciate. To the point that there are already several gurus of the financial markets that are arriving anunciando un event de estas características for the next few months, or maybe years.

Si se desarrolla un evento de esta relevance, esté en guardia rápidamente debido a que será el peor escenario viable. Being able to lose much more money than you initially imagine. Even though it can generate business possibilities due to the large amount of financial assets in which you can invest your money at this time. Through new financial instruments that contemplate all possible scenarios.

A stock market crash is something very serious that cannot be taken lightly, much less with spontaneous actions that lead nowhere. It will be necessary that you have an action plan programmed en caso de que este movimiento se desarrolle en los próximos meses. Especialmente para proteger sus aportes monetarios a través de acciones más fuertes y rápidas. Solo cabra que implemente una strategy de inversión excepcional.

Historical background of the stock market crash

If there has been a crash in the equity markets par excellence, it is none other than the 29th. The consequences are in the history and economics books, and why not, in some films that reflect this historical fact. What's more, the crack of 29 It took place on October 24, 1929, and was known as Black Thursday, being the trigger for what would be the Great Depression.

Stock market shares plummeted at levels unknown until then. Not a few were the investors who were completely ruined during those fateful days for all. Where speculators sold all the securities they had in their investment portfolios. Such was the panic in the financial markets that the growth in sales drove the value of shares down.

Todos los inversores, grandes y pequeños, empezaron a deshacerse de sus posiciones con un target muy claro: perder la menor cantidad de dinero viable. Sus efectos fueron abrumadores debido a su especial gravedad. Many savers lost more than 80% of their invested capital in a bag. And others worse still, basically declared bankruptcy. Poverty was installed in much of the society of the United States, with effects that we all know by now.

Other cracks in history

This financial collapse has been recorded in many history books. It was not the only stock market crash, but later others have developed, even though with much less intensity. The crack of 87 stands out above all, popularly known as Black Monday. It was one of the worst sessions in history for the North American stock market, which collapsed by more than 500 points and its selective benchmark depreciated by more than 22%. Something unheard of at the time that could happen to the financial markets. Not in vain did it shake the interests of hundreds and hundreds of investors. Among its causes are a very high trade deficit, high inflation, a war situation in the Persian Gulf, with its problems for the supply of oil and to end many tensions in the real estate market.

This perfect storm developed in the stock market has had another aftershock in 2008, of which we now face its consequences. Even though more than anything we are referring more than anything to the world stock market crisis of October this year. With a historic drop in the stock prices of practically all the stock exchanges in the world, with practically no exceptions. The declines represented brutal declines, higher than 10% in the same or multiple trading session.

What could happen now?

So far a small review of what these movements have been throughout the last hundred years. But what if a crack develops right now or very soon? Well, I would also have devastating effects on investors' interests, and among them yours. For the time being, the share price crash could surpass the 20% barrier. That means a lot, a lot of money in your stock positions.

It would affect all the stock markets and without exception. Driven in this case by the greater globalization of the economy, and by the amplitude of the stock markets. There would be no viable truce and surely you would lose more than ever. Even to show all your contributions. It is true that now there are greater defense mechanisms, but little could be done in this scenario so little desired by all the agents that act on the Stock Exchange.

Of all the few, few tools you will be able to use if this violent scenario lands at the prices of companies around the world. Only with a little prevention can you cushion its effects.. And in this sense the lines of action that you must conform to protect the savings of a lifetime are directed.

Its main effects on money

If a fall like the previous ones happens, things will go wrong for you if you have open positions in equities. Not in vain, you will leave yourself on the road more than on any other occasion. Even at the risk of really ruining you. As a consequence of these abrupt movements, you will have no choice but to make massive sales in the financial markets. And always at a market price, which will be very low, almost given away from today's perspective.

They will make you lose a large part of the invested capital, with depreciations that can come dangerously close to 50%. Regardless, you can lower it if you act with some diligence when the stock market crash unfolds. But the truth is that the self-defense markets that you will have in those moments are minimal. There will be so many sell orders that are generated in the financial markets that it will be very difficult for them to be executed, much less at the prices that you want to formalize the operation in the equity markets.

If you have not sold in the previous days you will have much more difficulty doing it from these exceptional moments. It's no wonder you have to put yourself in the worst case scenario and take charge that things will go very badly for you in the stock market. No exclusions because cracks impact all series of stocks, indices and sectors of the stock market. You have no escape if one of these situations develops in such an undesirable way for your interests.

What should you do?

En el momento preciso en que se origine una fisura, be cual sea su naturaleza, lo más imperativo será deshacerse de tus posiciones abiertas lo antes viable, sin demora. Será la única forma de ahorrar una parte de sus ahorros. Ante esto, no tendrás más remedio que aplicar una serie de acciones que serán imprescindibles en estos casos. Son los siguientes.

• Try by all means that the shock wave does not completely meet you. This means that you will have to cut the cataracts on the first day. And of this dynamics avoid that the cuts focus even more on the next sessions of equities.
• Don't obsess over trade your shares at a price set by you. But on the contrary, you must formalize it under a market price. It is the only opportunity for the order to sell the shares to be executed.
• Don't try to wait to see how financial markets evolve. It will be a serious mistake that you will be able to regret after a few days due to the low liquidity of the stock markets.
• As a solution to close positions in the financial markets, you can use a little trick if you have a lot of money invested. It is none other than to perform partial sales to save at least part of your invested assets.
• In these special situations, it is not important to highlight any viable strategy, but you should make very radical decisions and in a short time. It's no wonder the minutes play against you.
• You also can't set goals since it is at the expense of the stock markets and has little margin to operate on its investments.
• Despite the low prices at which the securities were traded don't try to buy their shares. At least in the short term. Undoubtedly, you could worsen your situation, reaching levels practically unacceptable on your part.

Can you see a crack?

It is very difficult to anticipate events. Not even the great experts have succeeded. It can only be interpreted that something serious is happening in equities. Therefore, it is not worthwhile to position oneself on its values. The only clue comes from the evolution of the economy, especially when it generates serious imbalances in some of its main indicators or parameters.

A shock is usually preceded by some downward movements of a certain intensity. They can warn of what may happen in the coming months, or even weeks.

Whatever the case, in training for these exceptional moves, stocks and indices can leave half their value behind. until achieve never-before-seen levels During the last years. It is, in short, the worst thing that can happen to you on the stock market. You will not have many mechanisms to safeguard your savings. And always in a limited way. Do not forget to finish that you will always be exposed to the financial markets, without being able to do much.