Questions I have received recently are: “When will this housing bubble burst?”, “When will the next stock market crash be?”, and “Why do Baby Boomers not understand the younger generation’s financial struggles?”
- First of all, there is no housing bubble currently, and there likely isn’t going to be one again, at least not in our lifetime. Here’s why:
- The value of properties has gone up a ton over the last 2 years, so I understand why you would think it would crash if that is your past experience. Homes were slightly overvalued, but then the value dropped a bit to level out and now they’ve just been steadily slowly growing in value like usual.
- The stock market crashes roughly every 10 years from something very different each time. Once the stock market crashes once from something, it won’t crash from that event again. We learn from our past mistakes. Since we’ve already had a crash from the housing market, it won’t happen again. The government and real estate businesses have created rules, laws, and safety nets.
- I also want to point out that the Economy and the Stock Market (or Market for short) are separate from each other. The economy can be fine, but the stock market is doing terribly or the stock market can be doing great while the economy is doing terribly. For example, right now the market over the last year and a half is way up and many people have had crazy gains, but the economy still isn’t great. Many people are unemployed, inflation is high, employers can’t find workers, the economy is still a mess.
Let’s go over recent history of major stock market crashes in the U.S., since those are fantastic opportunities to invest even more:
- Black Monday- Oct. 19th, 1987, saw U.S. markets fall more than 20% in a single day. It is thought that the cause of the crash was precipitated by computer program-driven trading models that followed a portfolio insurance strategy as well as investor panic. (Fun fact this is the day my parents started dating XD)
- Dot com bubble- 10 Mar, 2000- Collapse of the tech bubble. Internet & tech was way over valued. It crashed, then has steadily kept rising since.
- Housing Bubble- 11 Oct, 2007/Sept. 16 2008- From their peaks in October 2007 until their closing lows in early March 2009, the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 all suffered declines of over 50%, marking the worst stock market crash since the Great Depression era.
- Covid Crash- 24 Feb, 2020- The S&P 500 index dropped 34%, 1145 points, at its peak of 3386 on February 19 to 2237 on March 23. This crash was part of a worldwide recession caused by the COVID-19 pandemic.
There were some other smaller crashes in there, but these are the major ones that everyone remembers if they are old enough. We have 1987, 2000, 2008, & 2020.
It’s not exactly 10 years, but roughly every 10 years we have a major crash, so it’s best to be prepared and expect it. I say to expect one every 8-12 years.
I have a another blog post called: How to Prepare for a Market Crash which will definitely help you out. It’s best to start preparing now, the earlier the better.
This means our next major crash will be somewhere between 2028-2032 and it will be for some unexpected reason. Every time it will feel like the market won’t recover & is scary.
There was a crazy bull market (market consistently going up) from 1937-1962, and again from 1962-1987. Where the market didn’t crash once. This is why The Silent Generation and Baby Boomers have more money and don’t understand why Gen X & Millennials tend to have more financial problems than they did. They had one of the longest and best, if not the best, market runs in American history. It was easy for them to buy a house, get a decent paying job, and this was before going into debt for everything was so easy & accessible. This was before hyper-consumerism was heavily promoted and shoved down our throats everyday on social media, and before a lot of people had college educations. Also, they of course have had more time than us to accumulate wealth and may not remember the struggles of their youth as well anymore. Now, they are the ones in charge (mostly) and making the laws based on THEIR experiences 30+ years ago, not how things are in today’s reality.
This isn’t to say that all baby boomers had/have a great time financially! I’m just saying how their struggles in the 60s/70s/80s are different from ours in the 00s/10s/20s. Both sets of challenges are very real and valid, our struggles are just different. Even people of the same generation can have very different financial struggles and outcomes. Where the younger generations have a problem with baby boomers is when they try to use or suggest solutions that worked for them back in the 60s/70s/80s, times are different and the solutions that worked great for you then, often don’t work for us now unfortunately.
Overall, my job is to educate you, to help you build wealth, and help you be prepared for market crashes to then protect your wealth. So here is a link to my “Financial Advice” tab and my “Most Popular Posts“.
As always, thank you so much for reading!
- My Financial Planning Workbook!
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