On 19 February, the S&P 500 hit a record high of 6,147.43. Within weeks, President Trump unleashed the steepest US import tariffs since 1930. This prompted a global wave of share selling. At its 2025 low, the S&P 500 hit 4,835.04 on 7 April.
A rapid retreat
At its worst, the index was down 21.3%, therefore entering a brief bear market. It now stands at 5,272.43, 9% above 2025’s low. Thus, this latest US stock-market crash lasted mere days — so far.
In two days, the S&P 500 fell 9.9%, destroying $6trn of global wealth. In the past 75 years, the only steeper two-day falls came in October 1987 (-24.6%), November 2008 (-12.4%), and March 2020 (-13.9%). Therefore, while 2025’s market collapse was steep and sudden, it was not deep and long — as yet.
Crash course
Having endured the 1987, 2000-03, 2007-09, spring 2020, and this latest crash, here are my five lessons for investors to consider:
1. Diversification works
Diversification — spreading one’s money to avoid concentration risk — is described as ‘the only free lunch in finance’. When markets tumble, I’m relieved that my family portfolio is widely diversified. Though our wealth is concentrated in shares, we keep money in low-risk investments (cash and money-market funds). These assets weathered this storm without incident.
2. Leverage can hurt
In good years, leverage — using borrowed money or financial instruments to magnify returns — is a winner. But leverage is a double-edged sword, as it also magnifies losses. I’m happy with zero leverage in our portfolio, so I can sleep better at night.
3. Liquidity is lovely
When investors hurriedly sell assets, this dash for cash can become a fire sale. In stressed markets, liquidity plunges, making selling in volume without moving prices difficult. Hence, leaving liquidity traps can be painful and expensive. My family portfolio has lots of liquidity, so we don’t sell shares during market panics. Instead, we keep cash to buy discounted shares during prolonged stock-market crashes.
4. Buying the dip
In previous slumps, we ‘bought the dip’, buying at reduced prices. The rapidity of this latest rebound made this difficult to execute. However, we did buy one stock at a 25% discount to recent prices. Watch this space…
5. Don’t panic!
Douglas Adams, brilliant author of The Hitchhiker’s Guide to the Galaxy, would back this advice, which was on the front cover of his galactic guide. When greed becomes fear, panicked investors sell and can sustain losses. I take the contrarian approach by buying big during panics.
Buy more Glencore?
Shares in commodity trader Glencore (LSE: GLEN) got crushed this month. On 7 April, they hit 205p, over 300p below the 506.72p they reached on 20 May 2024. This FTSE 100 stock now stands at 255.75p (now 24.8% above 2025’s low), valuing this firm at £30.7bn.
I wish I’d bought Glencore shares as the price neared 200p, as I see this as a potential recovery/value play — even though mining shares are notoriously volatile. The shares are down 45.9% over one year, but up 81% over five years. Adding cash dividends (current cash yield is 3.6% a year) boosts these figures.
For sure, the global economy is shaking and demand for metals is slowing. But after such steep price falls, I wish I’d bought more Glencore for our portfolio!
