Since hitting its closing low in March 2026, the S&P 500 has rallied significantly, currently standing at 19.4% above its earlier low. Observers note striking similarities between this current uptrend and the periods leading up to notable stock market crashes in 2000-2003, 2007-2009, and more recently, in 2025. This raises an important question for investors: what lessons can be gleaned from historical market downturns?
Reflecting on three decades of investing, one commentator recalls enduring six significant market crashes. The first was Black Monday in October 1987, when the S&P 500 plummeted 20.5% in a single day. Remarkably, the index finished the year up 2% when including dividends. This leads to the first takeaway: in the long run, even severe market declines can appear as mere bumps in the road.
Next was the bursting of the dot-com bubble, where the Nasdaq Composite index saw a staggering 78% drop from March 2000 to October 2002. The lesson here is clear: excessively inflated share prices are unsustainable, and market corrections are inevitable.
The third major crash was the global financial crisis of 2007-2009, a period so tumultuous that it shook the very foundation of capitalism. During this time, panic swept through the streets, with many rushing to withdraw their savings from struggling banks. The lesson drawn from this experience is to seize investment opportunities during times of profound despair. Investments made in March 2009 have reportedly increased tenfold.
Fast forward to the COVID-19 pandemic, when stock markets in the US and UK suffered a sharp 35% decline within a month before experiencing a robust recovery. Reflecting on their own investment strategy, the commentator and their partner made a decisive move to invest 50% of their wealth into shares just as the market shifted, aligning with Warren Buffett’s philosophy of being “greedy when others are fearful.” Timing the market is often deemed a risky strategy, yet this particular choice proved fruitful.
To prepare for future downturns, the commentator emphasizes the importance of maintaining cash reserves for opportunistic purchasing. A significant portion of their portfolio is allocated to low-risk, low-fee money-market funds.
Delving into specific investments, the focus turns to the UK-based food chain, Greggs. After a substantial price drop, Greggs was purchased at 1,696.7p per share. Despite facing challenges, such as a 14.8% decline over the past year and a 30% decrease over the last five years, the company offers a generous dividend yield of 4%, surpassing the FTSE 100’s yield of 3.1%. Currently, Greggs is trading at 1,743p, significantly below its peak of 3,443p reached in December 2021, providing a possible investment opportunity given its valuation at just 14.6 times trailing earnings.
Nevertheless, potential risks loom large. Sustained inflation and the impact of GLP-1 diet drugs may impact sales and profit margins, while external factors like unfavorable weather and increased taxes could also hinder performance. Despite these challenges, there is optimism regarding Greggs’ ability to weather future market downturns.
For those contemplating investment, expert Mark Rogers has recommended a selection of stocks, including Greggs, within his Twelfth Magpie Share Advisor newsletter. The current landscape presents intriguing potential for investors willing to explore standout opportunities.
In conclusion, a thorough understanding of historical market patterns, a well-structured investment strategy, and a willingness to adapt could prove invaluable as investors navigate the complexities of the stock market.
