Key Lessons from Crash History
- COVID Crash (March 2020): Those who bought Bro stocks at bottom made 400-1,200% gains by 2024
- 2022 Fed Crash: Buying at -50% (June 2022) = 200-300% gains by 2025
- Problem: 95% of people panic sell instead of buy—emotions override logic
- Solution: Pre-defined buying plan, cash reserves, and DCA through volatility
- Reality Check: Crashes hurt—but winners are forged in bear markets
Case Study 1: The COVID Crash (March 2020)
The Setup:
February 19, 2020: Markets at all-time highs. Then: global pandemic. Lockdowns. Economic collapse fears.
What Happened:
- S&P 500: Dropped -34% in 23 days (fastest crash in history)
- Nvidia: $170 → $70 (-59%)
- Tesla: $585 → $70 (-88%!!)
- Amazon: $2,170 → $1,690 (-22%)
The Emotion at the Bottom (March 23, 2020):
"This is the end of capitalism."
"Unemployment will hit 30%."
"Tech stocks are going to
zero."
"Don't catch a falling knife—wait for the bottom."
Fear was 10/10. CNBC
anchors looked terrified.
If You Bought $10,000 at the Bottom:
| Stock | Bought (March 2020) | Peak (2024) | Return |
|---|---|---|---|
| Nvidia | $70 | $950 | +1,257% |
| Tesla | $70 | $415 | +493% |
| Amazon | $1,690 | $3,500 | +107% |
| Microsoft | $135 | $430 | +219% |
$10K invested
in March 2020 = $50K-130K by 2024 depending on picks.
5x-13x your money in 4
years.
But Here's What Actually Happened to Most People:
They panic-sold in March 2020. Locked in losses.
Then watched from the sidelines as stocks recovered +400% over the next 18 months.
The $200K Mistake: Someone with $50K in Nvidia at $170 ($50K) sold at $70 (-$25K loss). If they held? Would be worth $680K by 2024.
Contrarian Take
Most analysts focus on Nvidia's GPU dominance, but they're missing the real story: their software moat through CUDA. Competitors can match chip performance, but can't replicate a decade of developer ecosystem investment.
Case Study 2: The 2022 Fed Crash
The Setup:
November 2021: Peak euphoria. Nvidia $350. Tesla $1,200. Then: Fed raises rates. Inflation 9%. Tech massacre begins.
What Happened:
- Nasdaq: -33% peak to trough
- Nvidia: $350 → $110 (-69%)
- Tesla: $1,200 → $100 (-92%!!!!)
- Meta: $380 → $90 (-76%)
- Palantir: $29 → $6 (-79%)
The Bottom (October 2022):
Elon selling Tesla to buy Twitter. Everyone says "tech is dead." Cathie Wood's ARKK down -75%.
If You Bought $10,000 at October 2022 Lows:
| Stock | Bought (Oct 2022) | Price (Feb 2026) | Return |
|---|---|---|---|
| Nvidia | $110 | $1,000 | +809% |
| Meta | $90 | $490 | +444% |
| Tesla | $100 | $350 | +250% |
| Palantir | $6 | $82 | +1,267% |
$10K invested
in Oct 2022 = $35K-137K by 2026.
3.5x-13.7x your money in 3.5 years.
Why Buying Crashes is Hard (Even When You Know You Should)
Psychological Barrier #1: "What if it goes lower?"
You buy Nvidia at $110. It drops to $90. You feel like an idiot.
Solution: Never try to time the exact bottom. Use DCA (Dollar-Cost Averaging)—buy in tranches.
Psychological Barrier #2: "This time is different"
Every crash feels like the end. In 2020: pandemic apocalypse. In 2022: Fed killing tech forever.
Reality: It's never different. Markets always recover. Question is: how long?
Psychological Barrier #3: Loss Aversion
Humans feel losses 2.5x more than gains (behavioral economics). Watching your portfolio drop 50% is psychologically unbearable—even if you "know" it'll recover.
Solution: Only invest money you won't need for 5+ years. If you will likely need it in 2 years, don't buy stocks during a crash.
The Crash-Buying Playbook
Step 1: Build a War Chest (Before the Crash)
Keep 20-30% of your portfolio in cash/stable assets. When crash comes, you have dry powder.
Example: $100K portfolio → $70K stocks, $30K cash ready to deploy.
Step 2: Define Your Buying Triggers
Don't wait for "the perfect bottom." Use quantitative triggers:
- Market down 20%: Deploy 1/3 of cash
- Market down 30%: Deploy another 1/3
- Market down 40%+: All-in with remaining cash
Step 3: Focus on Quality, Not Junk
During crashes, everything falls—winners AND losers.
Buy winners on sale: Nvidia, Microsoft, Amazon
Avoid pump-and-dumps: Meme stocks, unprofitable SPACs, crypto garbage
Step 4: DCA Through the Valley
You can't time the bottom. So don't try.
Example Strategy:
- Week 1 of crash: Buy $2K
- Week 3: Buy $2K more
- Week 6: Buy $2K more
- Week 10: Buy $2K more
Result: Average price somewhere in the middle. You won't get the perfect bottom—but you won't miss the recovery either.
Step 5: Hold Through the Recovery (The Hard Part)
After you buy the crash, it'll get worse before it gets better. Prepare mentally:
- Your $10K becomes $7K initially (down 30%)
- Then becomes $15K in 12 months (up 50%)
- Then becomes $30K in 24 months (up 200%)
The winners are those who hold through the first drawdown and catch the recovery.
When NOT to Buy the Crash
Scenario 1: You Need the Money Soon
If you need cash in 6-12 months (house down payment, tuition, emergency), do NOT buy stocks during a crash. Recoveries take 1-3 years.
Scenario 2: You're Overleveraged
If you're using margin or loans to buy stocks, crashes will bankrupt you. Margin calls = forced liquidation at the worst time.
Scenario 3: The Company is Dying
Not all crashes are buying opportunities. If the business fundamentals are broken (e.g., Bed Bath & Beyond, WeWork), it's not "on sale"—it's going to zero.
Scenario 4: You Can't Sleep at Night
If watching your portfolio drop 40% gives you panic attacks, don't buy more. Stick to index funds and dollar-cost average calmly.
The Brutal Truth About Crash Buying
Buying Bro Billionaire stocks
during a crash is the best strategy mathematically.
But it's the
hardest strategy psychologically.
Most people will panic sell instead.
They'll miss the recovery. They'll regret it forever.
If you can hold through
-50%,
If you have cash reserves ready,
If you DCA
instead of trying to time the bottom,
You'll make life-changing money while everyone else panics.