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Have you ever wondered, “How often do stock market crashes happen, and what should I do when they do?”
That’s a question many investors are asking, especially after the 2025 market panic. We’ve now seen seven major market panics in just 25 years, slightly above the historical average of one bear market every four to five years. And still, markets are at or near all-time highs.
From the dot-com crash of 2002 to the most recent tariff panic of 2025, investors who stayed the course have seen the S&P 500 grow more than sixfold, from 803 to over 6,204.
Let’s take a look at what we’ve lived through, and why long-term planning matters more than ever.
1. The Dot-Com Panic (2000–2002)
The internet boom inspired excitement across the globe. But by March 2000, optimism turned into anxiety as the dot-com bubble burst. A recession followed. Enron collapsed. Tyco and WorldCom followed due to accounting fraud. Many investors lost trust in markets and sold at a loss. This became the deepest bear market since the 1930s.
Yet, the recovery was strong and swift. Markets rebounded until the next shock arrived.
2. The Global Financial Crisis (2007–2009)
Heading into 2007, housing prices and equities soared. But under the surface, the real problem was unsustainable debt. Subprime mortgages were bundled and sold. Lehman Brothers collapsed. Other financial firms fell one after another. The U.S. government responded with large-scale intervention.
This crisis brought unemployment to 10% and shrank GDP by 5%. However, from the bottom, markets staged another powerful comeback.
3. European Debt Crisis (2011)
Just after recovering from the global financial crisis, the world faced more uncertainty. Several European countries—Greece, Italy, and Spain—faced sovereign debt crises. Fear spread. The U.S. credit rating was downgraded. Equities dropped over 20% during the panic.
Still, once again, markets bounced back before the headlines improved.
4. Christmas Eve Panic (2018)
Trade tensions between the U.S. and China rattled investors. Tariffs increased costs on goods. The Federal Reserve raised interest rates four times that year. Then, the longest government shutdown in U.S. history began. On Christmas Eve, the market hit a dramatic low.
But by the very next day, stocks began to recover. And they kept rising.
5. COVID-19 Panic (2020)
In early 2020, the pandemic shut down economies worldwide. Markets lost a third of their value in just one month. Then, on March 23, the Federal Reserve stepped in with aggressive support.
Although inflation concerns would emerge later, this move restored investor confidence. Equities soared, surprising those who weren’t watching closely.
6. Inflation & Interest Rate Panic (2022)
Inflation hadn’t been a major issue since the early 1980s. Suddenly, it spiked to 9.1%. In response, the Fed raised interest rates 11 times in 16 months, the fastest pace in history. Economists predicted recession. Both stocks and bonds suffered.
Even so, markets began recovering in October 2022, well before inflation cooled or rates declined.
7. Tariff Panic (2025)
On April 2, 2025, President Trump announced the largest tariffs in U.S. history, calling it “Liberation Day.” Markets had already been falling since February. The intra-day decline exceeded 20%.
Yet by mid-April, equities had turned upward again. As always, the market began recovering before there was clear good news.
What We’ve Learned
We’ve lived through some of the largest equity market declines in history. And still, markets have grown significantly. Yes, declines are painful, but they’ve always been temporary. The gains have been lasting. To earn returns that outpace inflation, short-term volatility must be accepted. It’s part of the process.
At A&I Wealth Management, our team of trusted financial advisors in Lone Tree, Co can help you build a retirement plan that is realistic, flexible, and less stressful.
Frequently Asked Questions About Market Panics and Investing
How often do market crashes happen?
Historically, the stock market experiences a bear market—defined as a decline of 20% or more—about every 4 to 6 years. While each event feels different, long-term investors should expect periodic downturns as a normal part of investing.
What causes market panics?
Market panics are often triggered by economic shocks, geopolitical events, policy changes, or investor psychology. In the last 25 years, we’ve seen crashes tied to debt, inflation, pandemics, and tariffs.
Should I sell my investments during a crash?
In most cases, selling during a downturn can lock in losses and derail your long-term plan. Historically, markets recover before the headlines turn positive. Staying invested, when aligned with a strong financial plan, has proven effective over time.
How can a financial advisor help during market volatility?
A qualified advisor provides objective advice, emotional support, and strategic rebalancing during turbulent times. At A&I Wealth Management, we offer financial advice in Lone Tree, Colorado designed to help you stay focused and resilient—no matter the market.
Is now a good time to invest?
Timing the market is nearly impossible. However, if you have a long-term horizon and a personalized plan, any time is a good time to invest wisely. Consistency matters more than timing.
Final Thought
Don’t let fear of market downturns derail your long-term strategy. Instead, lean on experience, perspective, and expert guidance.
Schedule a consultation with your financial advisor or refer a friend who could benefit from our wealth management services today.
Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as financial or legal advice. Please consult with a qualified professional for advice regarding your specific situation.
DISCLOSURE: Client stories included in this blog reflect hypothetical client situations that represent those commonly encountered by AIWM representatives.
