When will the next stock market crash occur?

We are going to have a stock market crash, and possibly a recession, during President Donald Trump's first term. That is inevitable; the question is when. With this blog post, I’m going to try to let you know when far enough in advance that you can take action if you wish. I will update this page as I get more information.

I’m using the stock market crash on October 19, 1987 (United States) and subsequent recession (from July 1990 to March 1991) as my model. Note that anybody younger than 50 is unlikely to know much about these events. Note that I did not own any stock in October 1987 so I wasn't directly affected.

I successfully predicted the July 1990 recession in March 1990. I didn't think of it until September 1990 when a colleague reminded me that I had told him in March that there would be a recession. One of the problems with recessions is that you don't know when they start because it takes several months for the government economists to determine that a recession did indeed take place.

I do not expect the next crash to be as severe as the one in 1987. The stock market did eventually recover to where it was before the crash so people who had invested before the crash and then ignored it were made whole. I will discuss this in further updates: How long will it be before the stock market recovers from the crash?

July 19, 2018 At this point, my best guess is the 4th quarter of 2019 for the stock market crash.

Before making any investment decisions based on my advice, please read my Investment advice disclaimer.

Sell your stocks now!

Update January 24, 2015: My brother got back into two stocks and an index fund.

Update October 29: The small, -7.4% correction appears to be over and my brother is looking to get back into the stock market. Will there still be a larger correction? I will write another post in November to discuss this. Still, the advice in the last paragraph stands.

My brother, based on my recommendation, sold the index fund and both stocks in his IRA yesterday. Many stock advisors are saying that the S&P 500 is due for a "correction" of 20% to 30% by the end of 2015. But nobody knows when. So, instead of trying to time the peak, he went ahead and sold his index fund and captured a 22% gain.

The problem with waiting is that when you realize that it's time to sell, so does everyone else and it's too late to keep from losing large sums of money. The stock market can drop over 22% in one day, like it did on Black Monday in 1987.

The next step is to find a bond fund that invests in short-term corporate bonds (one to two year maturity) and try to capture a 2% to 3% return until the S&P 500 has its correction. Then we can sell the bond fund and get back into an index fund.

Ultimately, the S&P 500 will undergo its correction and then start heading back up. That's when you get back into stocks. Despite many advisors saying that this is time for that now, it isn't simply because it hasn't hit bottom yet. In my opinion, timing the exact peaks and valleys is really difficult and I don't try to do that. But timing 20% corrections and 20% increases isn't as hard.

Before making any investment decisions based on this blog post, please read my investment advice disclaimer.

I've found rather few investment advisors who are willing to recommend selling 90% or more of your stock holdings at the peak. To me, this is one of the keys to long-term gains in the stock market. If your investment advisor isn't willing to make dramatic changes to your portfolio, you should find one who will.

Scorecard: How good is my prediction?

Date	S&P 500 Close	Change From Recent Peak	Change From Sale Date	Comment
Sept. 18	2,011.36			Recent peak
Sept. 23	1,982.77	-1.4%		Sale
Sept. 30	1,972.29	-1.9%	-0.5%	One week after sale
Oct. 6	1,964.82	-2.3%	-0.9%	Two weeks after sale
Oct. 13	1,874.74	-6.8%	-5.4%	Three weeks after sale
Oct. 20	1,904.01	-5.3%	-4.0%	Two weeks after sale. Correction is over.
Oct. 27	1,961.63	-2.5%	-1.1%	Three weeks after sale

Updated Oct. 29 to add figures and a paragraph at the top about getting back into stocks.