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The advantage of a crisis

The crisis is an option – just a matter of what

In the minds of the average person, the crisis does not appear to have many benefits. This is one of the most difficult periods in the lives of most investors. Especially if you are just starting to get acquainted with investing, you will find it very difficult. It can be very scary when you see that your money is worth 20-30-40 or even 50% less in just a few months or even weeks.

The benefits of a crisis

The worst thing you can do here is go after the crowd and sell everything. This is because you are guaranteed to cut yourself off from the possibility of ever having your money. But let’s see how you can make money from it when everything falls and that’s why a lot of people panic and sell?

I anticipate that not all stocks / bonds / anything else are capable of benefiting from the “price-cutting” effects of a crisis. If this affects you or you have questions, please contact us.

The impact of a crisis

Seeing the powerful price-cutting effects of any crisis, there are very few who say, “Heavens! What an opportunity! ”. Regardless, of course, it is. If you use it well, it is an opportunity for you to profit, if use it bad, it is unfortunately an opportunity for someone else to win on you.

S&P 500 index - 30 years


The graph above shows the exchange rate of the S&P500 index from 1990 to the present day. All gray vertical bars show the crisis for any reason. As you can see, there were more of it. You can observe that the market works in cycles. A relatively short decline is followed by a relatively longer rise, followed by a rearrangement again. Being in it is not good, but spending the profits it can make you feel compensated.

What are the possible scenarios for a crisis?

If you know what is expected to follow, it is much easier for you to move on than if you are just trying blindly. If you look at the exchange rate curves, the line described by the curve can best resemble 4 letters. These are the V, U, W, L forms.
If I want to make a joke, I can say that whoever called them that way is either a very artist and sees the “zigzags” or used to read children’s writings instead of block letters. 🙂 This is because reality is not as straightforward as a block letter.

Which form does it cover:

V: It suddenly breaks, as it did now, and then starts up after the market participants “recover”. It’s obviously not so straight, there may be waves in it, but it’s basically going up.

U: similar to the previous one, the rhythm is a little different, rearrangement is a bit slower.

W: the beginning is the same as V, and then something happens in the middle of hurray optimism that puts development back strongly. It breaks the rhythm, rearranges everything, so the V starts all over again. Up to several times.

L: There was an example of this in 2008. At that time, the market was sideways for a very long time after the rupture. That is why the mortgage crisis lasted far much longer than the “average” crisis.

The graph above shows the exchange rate of the S&P500 index from 1990 to the present day. All gray vertical bars show the crisis for any reason. As you can see, currently the coronavirus-induced relapse is not the first in line. It was very similar before that. So in the market, you can observe that it works in cycles. A relatively short decline is followed by a relatively longer rise, followed by a rearrangement again. Being in it is not good, but spending the profits it can make you feel compensated.

What does an “average crisis” scenario look like?

Most market downturns do not last longer than 1-2 years. You can find exceptions, but they don’t last forever either. And most market rises can take up to 10 years, but then a reorganization is legal.

So basically you already know 3 + 1 things for sure:

  • there will be a crisis, you just don’t know when (if you’re in it, you don’t know the end, nor the next beginning)
  • it does not last forever, then comes an ascent
  • in the meantime, you’re probably going to feel bad, but one is just like that, doesn’t like uncertainty.
  • and +1: anyone, whatever you say how much your neighbor has lost on your investment, you know you probably got out, sold everything, and realized the loss.

Before we go any further, I kindly ask you not to put the money that is needed within a year even accidentally to riskier investments, just for the sake of return. (A longer period of time is already a function of a unique life situation.) Don’t do that even if a neighbor’s kid who has advanced to financial advisor 3 days ago tells you how big the business is.
Forget about getting rich quick as a beginner. Without experience, your chances are about the same as going into a casino. You can also win there, but many times the bank takes everything. It would be the same here. Rather, ask for help through the contact menu.

Well, if you do decide to sell, know that you only do it if you have to make a living, or if that something else brings more in 2-3-5 years before the market recovers.

The impact of the crises so far

In the case of an investment, the goal is obviously to make a profit. This can be done relatively easily with money and capital market instruments.

I have already written about how the money and capital markets produce money. On this page, you can see that there are real, tangible market processes behind the ability to generate money.
It is also striking that there are many more years when gains are made in exchange rates than when there is a loss.

I add, when everything falls, you don’t have to sell everything (in fact, we don’t recommend it at all), so you don’t realize the losses. If you wait, the exchange rates will “recover” and you will get the profits. But think about it, if you get in or around the bottom of the crisis, how far ahead of the others will you get to the end of the crisis?

That’s why now, by examining the “effectiveness” of 2 crises, you’ll see at the end of the article that the downturn isn’t such a big disaster. What’s more, if you can handle it, you’ll even be happy for it.

Let us examine the effects of 2 crises

We could go back all the way to the crisis of the 1930s, but since there are relatively few who have invested in the world economy then and are still living, let’s stick to what happened in the 2000s. We are now watching 2 events:
1. The Dot-com downturn, which had a negative impact on the index for 1 year, but the index reached its original level in nearly 7 years.
2. The mortgage crisis, which was present as a crisis for a year and a half, also took 7 years to catch up with the original level of this index.

Let’s say that you invest $ 1.000 a year, always in January. This corresponds to roughly HUF 300.000, and its size was manageable and believable in the early 2000s.

In this example, we look at 2 cases.

Case (A): 1 year before the crisis breaks out, you decide you have goals and you have time to move on,
Case (B): 5 years before the crisis erupts, you start setting it aside for later.

  • Let’s see how much of an actual drop you see in your own account with the market downturn on TV
  • How long did it take to get “at your money,” so how long could you have gotten out so you could get at least as much back as you put in?
  • If you decide that your plans are long-term anyway and you continue to save, what would you have achieved by the time the crisis is over.

Dot-com crisis

The pre-crisis peak for this asset fund was in May 2001, reaching January 2007.

Pre-crisis peak:
Lowest value:
New post-crisis peak:
Time range:

7 years

The market was catching up a little slower than in the previous periods, but it did happen in the end.

Here, I have marked with shades of blue the value you have invested, and in comparison, the warm colors show what you may have seen in the meantime.

Dot-com crisis affect on investment

Those for whom told more by the numbers will not be disappointed either 🙂:

You start saving 1 year before crisis

You start saving 5 year before crisis

Before crisis



Under crisis






Time till recovery

6 years (January of 2006)

4 years (January of 2004)

Achieved by the market recovers

805 (10%)

2052 (17%)

Yield / Year %



So you are at your money sooner than they are “officially” announcing the end of the crisis, and you might even win over it.

The mortgage crisis

The index has been falling since October 2007, reaching the same level by 2013.

Pre-crisis peak:
Lowest value:
Post-crisis peak:
Time frame:

7 years

Here, as well as above, I divided the colors according to the same logic. A quick review shows that the initial growth was followed by a sharp decline.

Mortgage crisis affect

Let’s also look at the numbers:

You start saving 1 year before crisis

You start saving 5 years before crisis

Before crisis



Under crisis






Time till recovery

4 years

4 years

Achieved by the market recovers

+2.701 (30%)

+3.993 (30,71%)

Yield / Year %



What can you do for yourself?

The first and perhaps most important thing is to stay calm. Even when gypsy children are just flying out of the sky. After all, if you’re nervous, you can typically make an impulse decision that you can regret later. However, you will have very little impact on the world economy with concern, so you can only and exclusively harm yourself.

If you have an investment, trust the manager. If you may not have someone to turn to, ask us.

Which is very important: if you don’t have to turn everything into cash just for the sake of your immediate livelihood (otherwise you would literally starve to death), please don’t sell anything in a panic. This is when you realize your loss, which is much harder to recoup later.
If you wait out, everything will get over, even if it’s hard to believe in the middle.
This setback is a very good opportunity for you to “shopping”. Whether at your current investment or elsewhere. It’s Black Friday just now, so it might be a good idea to put some extra money in it. (Obviously after proper thought, no chance without reason!)

If you don’t have an investment yet, but are interested in how you can win, it’s time to move on. There are basically 2 conditions for this:
1. Have enough reserves for a possible emergency. This solves the problem that if something unexpected happens to you just when the exchange rates are down.
2. Either from your own wellhead or with help, but know what you’re doing. You can reach us at the contact menu, we are happy to answer. A hurry will only result in a hurry, but you can now make a serious profit from planned action.


Black Friday in investment

Both cases showed that while the current value of regular savings is being pushed back by the crisis, on the one hand one has his money sooner than the end of the crisis is announced and on the other hand the newspapers have started writing about the fact that the crisis is now officially over, by then our man was not only at zero, but also able to achieve results.

The crisis is thus nothing more than a big “sale”.

As long as, in the case of the standard Black Friday, people trample on each other to buy everything, even what they don’t need, here the same phenomenon in the case of small investors just results in them trampling on each other to sell. Also what they need.
And at a depressed price, who do you think will buy it? Yes, you are right. The experts, so the big investors.
And no, don’t start scolding the multis and the rich. Rather, take an example of them because they don’t just buy out of love, that little ones don’t need, let someone to buy it.


  1. Why do you think many people are losing out on their investments?
  2. Do you have personal experience with this? Would you do anything different today?
  3. How would you benefit from a crisis? Would you start investing in the midst of a crisis?

I would love to read your opinion in a comment. Contact us with your specific question.

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