You just experienced your first market crash. Was it disastrous? Yes.
| Stage | Emotional State | Financial Description |
|---|---|---|
| 🙂 Optimism | Growing Confidence | Prices rise steadily but savings and fundamental still support growth |
| 🤩 Euphoria | Greed and Overconfidence | Valuations become inflated and stock as prices detach from fundamentals |
| 😟 Anxiety | Uncertainty and Doubt | Volatility increases and early warnings signs start to appear |
| 😨 Fear | Loss aversion | Prices fall further and emotional decision-making increases |
| 😱 Panic & Capitulation | Distress, exhaustion and despair | Heavy selling pushes prices far below intrinsic value; many investors exit at the worst time |
| 🌤️ Hope | Cautious optimism | Selling pressure reduces and markets begin to stabilize |
| 📈 Recovery | Renewed confidence | Sustained prices increase and long-term investors return |
Scenario will appear here
See how different decisions affect risk and potential returns during a market crisis
Select a decision to see its financial impact.
This chart explores how investors usually feel during a market crash. Market crashes follow patterns, not just in prices but also emotions. The classic emotional cycle during a crash looks like the table above. Happy first, desparation and panic later and as the market recovers, investors seem healed and hopeful too.
Even though crashes look scary, experienced investors remain calm. They know what comes next and what to do when other inexperienced investors start panic selling
1. Stocks become “on sale”
When prices fall, high-quality companies' stocks become cheap compared to normal times.
Smart investors love buying great stocks at a lower price or discount
History shows that markets always recover
So buying during crashes leads to leads to profit during recovery
During crashes investors can:
This improves portfolio strength. Investors predict which industries bounce-back and buy stocks from companies accordingly at a lower price. When the market bounces back, they sell these stocks at the normal rate which will be higher than ever since the market has recovered.
Most investors panic → they sell low.
Experienced investors stay calm → they buy low.
So a crash separates:
Fear-driven beginners, and
Strategic investors who stay patient.
If you buy at the “bottom,”
the recovery phase multiplies your returns later.
That’s why seasoned investors don’t fear crashes —
they see opportunity, not disaster.
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