Why Hoping for a Market Crash Is a Bad Idea

The S&P 500 is up 4% in 2025, and already, I’m seeing people claim that a market crash would be great for younger investors. I have heard in a podcast or two the following ideas:

“The upside of shrinking these asset prices is that it gives [young and working-class people] a legitimate chance to buy into those markets at lower levels, making equity ownership and/or home ownership more possible.”

On the surface, that makes sense. If the market eventually recovers, then lower prices today mean higher future returns for those just starting out.

But here’s the problem: markets don’t crash in isolation. When asset prices fall, economic pain usually follows. Jobs disappear, promotions dry up, hiring slows, and consumer spending shrinks. And when that happens, it’s not just a buying opportunity—it’s a financial storm that can be difficult to weather. In addition, when markets drop, people are afraid and don’t have the nerve to buy more. Only experienced investors who have been through the cycle a few times, can recognize the market drops as buying opportunities.

The Hidden Cost of Recessions

If you’re lucky enough to keep a high-paying job during a downturn, then sure, a market dip is a buying opportunity. But that’s not the case for everyone. In fact, research on The Short- and Long-Term Career Effects of Graduating in a Recession suggests that those who enter the workforce during an economic downturn see 5% lower lifetime earnings. That loss isn’t just a temporary setback—it compounds over decades.

The study states:

“A typical recession—a rise in unemployment rates by 5 percentage points—implies an initial loss in earnings of about 9%, which halves within five years and finally fades to 0 by ten years. Over time, this adds up to about a 5% loss in cumulative earnings.”

You might think, “So what? I lose 5% of my lifetime earnings, but I get to buy stocks at a 20%+ discount.” Let’s break that logic down.

A Small Drop in Earnings Means a Bigger Drop in Savings

Losing 5% of your income doesn’t just mean less money to spend—it means a much bigger hit to your savings rate.

Let’s say you earn $100,000 after tax and spend $80,000 a year. That gives you a savings rate of 20% ($20,000 saved). Now, imagine your income drops by 5% ($5,000), but your spending stays the same. Your new savings rate is now $15,000 per year—a 25% reduction in savings!

And if stock prices are down 20%, you’re still at a disadvantage. Before, you could buy 200 shares of an S&P 500 ETF at $100 per share with your $20,000 savings. Now, even with a 20% discount ($80 per share), your reduced savings ($15,000) only buy 187.5 shares.

Over a lifetime, a 5% income loss could mean missing out on $100,000–$200,000 in total earnings—money that could have been invested. Do a few discounted stock purchases in your 20s make up for that? Not even close.

Price Discounts Don’t Last Long

Another problem with the “market crashes are good for young investors” argument? Stock prices don’t stay low forever. Even if you buy during a downturn, the impact is marginal over a lifetime of investing.

For example, if you had dollar-cost averaged into stocks throughout the Great Depression, the investments made at the bottom (1932) would have grown about 2x more than those made right before or after. That’s a great return, but it wouldn’t have been the defining factor in your long-term wealth.

Buying during a downturn might make your retirement slightly nicer, but it won’t make or break your financial future.

“It Won’t Happen to Me”

People assume that a market crash is just a momentary dip in their portfolio. But what if it affects your job? Your ability to find work? Your family’s finances?

It’s like those who say, “I’ll buy a house when prices crash.” If housing prices collapse, do you think everything else in your life will stay the same? No way. If real estate plummets, it’s usually because interest rates are high, unemployment is rising, or the economy is in deep trouble.

Market crashes don’t exist in a vacuum. They come with consequences—ones you can’t always predict.

Don’t Hope—Prepare

The past 15 years have been one of the best stretches for equities since 1970. Does that mean a crash is imminent? Not necessarily. But bull markets don’t last forever.

Rather than rooting for a downturn, take steps to protect yourself:

Know Your Portfolio – Diversification isn’t just a buzzword; it’s your safety net. Make sure your portfolio has both risk and non-risk assets (like Treasury bills or short-term bonds). Alternative assets—real estate, gold, even crypto—can help hedge against stock market volatility.
Know Your Network – Your investments are one thing, but your career resilience matters just as much. Research suggests that job opportunities often come from weak ties—acquaintances, not close friends. Build and maintain your professional network before you need it.
Know Your Budget – Cutting spending isn’t a long-term wealth-building strategy, but in a downturn, knowing where your money goes is crucial. Audit your spending to find areas where you can create more financial flexibility.
Know Your Opportunities – Recessions can be a time for reinvention. Fewer competitors, lower costs, and better hiring opportunities can make it an ideal moment to launch a business or pivot careers. Some of the biggest success stories—Uber, Airbnb—were born during downturns.

Final Thoughts

Recessions aren’t opportunities to celebrate; they’re challenges to navigate. While bear markets can present investing opportunities, the economic pain they bring far outweighs the benefits of temporarily lower prices.

So instead of hoping for a crash, make sure you’re ready for one. As Zig Ziglar said, “Success is when opportunity meets preparation.” Be prepared, stay diversified, and focus on long-term resilience—not short-term price movements.

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