Money Guy Show: The 5 Worst Market Crashes of All Time (And What We Learned)
Hosts: Brian Preston and Bo Hanson
Release Date: July 18, 2025
In this compelling episode of the Money Guy Show, hosts Brian Preston and Bo Hanson delve deep into the annals of financial history to unpack the five most devastating market crashes in U.S. history. Through meticulous analysis, they explore the causes, effects, and enduring lessons from each crash, equipping listeners with the knowledge to navigate future market volatilities confidently.
Introduction to Market Crashes
[01:00] Brian Preston:
"Markets crash. That's not new. What you do next, that's everything."
Brian sets the stage by emphasizing that market crashes are recurring events in financial markets. The focus, however, should be on the strategies and decisions made post-crash to mitigate losses and capitalize on future growth.
[01:04] Bo Hanson:
Bo echoes Brian's sentiment, highlighting the media's tendency to amplify fear during market downturns. He underscores the show's objective to provide a clearer, more strategic perspective on handling financial crises.
1. The Great Wall Street Crash of 1929
Overview and Causes
[01:40] Bo Hanson:
Bo introduces the first market crash, the infamous Great Wall Street Crash of 1929, which led to the Great Depression.
[02:04] Bo Hanson:
"This actual crash took place from 1929 to 1932. And as you can imagine, the headlines were pretty aggressive."
He paints a vivid picture of the panic and uncertainty that gripped the nation during this period.
[03:04] Brian Preston:
Brian elaborates on key factors, notably excessive speculation and margin trading, which fueled the market bubble. He reveals startling statistics, "In 1929, there were 300 million shares of stock that were on margins."
Effects and Aftermath
[04:20] Brian Preston:
Discusses the severe economic downturn: "GDP fell 30%, unemployment peaked at 25%." This illustrates the profound societal impact of the crash.
[04:52] Bo Hanson:
Bo highlights the liquidity crisis and bank failures, noting that "over 9,000 banks failed." The market didn't recover to its pre-crash levels until 1954, underscoring the prolonged nature of the depression.
Lessons Learned
[05:35] Brian Preston:
Brian introduces the metaphor, "Trees don't grow to heaven," cautioning against unchecked greed and excessive risk-taking. He advises against chasing market trends and emphasizes diversified, prudent investment strategies.
[06:24] Bo Hanson:
Bo reinforces the importance of maintaining consistent investment behavior, especially during market frenzies.
2. Black Monday (October 1987)
Overview and Causes
[07:35] Bo Hanson:
Bo transitions to the Black Monday crash of October 1987. This day remains the most significant single-day drop in U.S. stock market history.
[07:47] Brian Preston:
Brian cites the staggering 22.6% drop in the Dow Jones Industrial Average, attributing the crash to programmatic trading and portfolio insurance mechanisms that exacerbated the decline.
Effects and Aftermath
[08:28] Bo Hanson:
Bo explains how complex financial products and high valuations, combined with global geopolitical tensions, triggered a cascading sell-off.
[09:30] Brian Preston:
Brian provides a visual analysis, emphasizing that the 22.6% drop occurred in a single day, causing immense portfolio losses and investor panic.
[09:58] Bo Hanson:
Despite the severe market drop, no recession followed, demonstrating that a single bad day doesn't necessarily derail the broader economy.
Lessons Learned
[10:47] Brian Preston:
Highlights the concept of V-shaped recoveries, illustrating that long-term investors can withstand short-term volatilities.
[11:45] Bo Hanson:
Bo discusses intra-year market fluctuations, noting that even during peak-performing years, significant downturns can occur. He stresses the importance of staying the course and avoiding emotional investment decisions.
3. The Dot Com Bubble Burst (2000-2002)
Overview and Causes
[12:34] Brian Preston:
Brian reflects on the Dot Com Bubble and its inevitable burst, driven by speculative investments in unprofitable internet companies.
[13:12] Bo Hanson:
Bo attributes the crash to overvaluation and herd behavior, where fear of missing out (FOMO) led to irrational exuberance in the market.
Effects and Aftermath
[14:31] Bo Hanson:
Bo points out that the S&P 500 dropped by 49%, marking a significant contraction in the market.
[15:18] Bo Hanson:
He emphasizes the role of diversification and goal-based investing in mitigating losses. Regular investments through dollar-cost averaging allowed many to capitalize on the market's decline.
Lessons Learned
[16:20] Brian Preston:
"Hype is not a business model."
Brian advises investors to focus on fundamental values rather than trends, cautioning against chasing speculative ventures.
[16:22] Bo Hanson:
Bo concurs, advocating for market-based investments over attempting to pick individual winners, as professional fund managers often underperform the index.
4. The Great Recession (2007-2009)
Overview and Causes
[17:24] Brian Preston:
Brian introduces the Great Recession, symbolized by the collapse of the housing market and the implosion of financial institutions like Lehman Brothers.
[17:58] Bo Hanson:
Bo identifies key factors: subprime mortgages, excessive leverage, and the packaging of bad loans into complex financial products, leading to systemic failure.
Effects and Aftermath
[18:44] Brian Preston:
Brian details the 49% market drop over two years and the ensuing global recession, highlighting the enduring impact on housing and employment.
[20:31] Bo Hanson:
Bo discusses the severe consequences, including job losses, halted construction, and disrupted supply chains, which continue to affect the economy today.
Lessons Learned
[21:40] Brian Preston:
Brian advises adhering to the financial order of operations, emphasizing the importance of maintaining cash reserves and avoiding debt traps.
[22:23] Bo Hanson:
Bo underscores the necessity of learning from history to avoid repeating past mistakes, advocating for the use of reliable resources and tools provided by wealth management firms.
5. The COVID Crash (March 2020)
Overview and Causes
[23:12] Brian Preston:
Brian reflects on the unprecedented nature of the COVID-19 Crash, driven by a global pandemic that no one anticipated.
[23:55] Bo Hanson:
Bo attributes the crash to economic shutdowns, supply chain disruptions, and widespread fear, leading to the fastest bear market in U.S. history with a 34% decline in just over a month.
Effects and Aftermath
[24:46] Brian Preston:
Brian discusses the massive stimulus packages deployed to mitigate the economic impact, resulting in the shortest recovery in U.S. history, thanks to rapid monetary interventions.
[25:47] Bo Hanson:
Bo emphasizes the importance of having a sound financial plan, including emergency reserves, to navigate unforeseen crises without making panic-driven decisions.
Lessons Learned
[26:49] Brian Preston:
He promotes the use of structured financial resources and educational tools to avoid common financial pitfalls during crises.
[28:06] Bo Hanson:
Bo reinforces that investing is a long-term endeavor, advocating for diversification and maintaining a steady investment strategy despite short-term market turbulences.
Conclusion: Embracing Market Volatility with Confidence
[29:25] Brian Preston:
Brian encourages listeners to adopt a long-term perspective, highlighting the stock market's historical growth of 17,000% since 1930. He emphasizes that downturns are inevitable, but preparedness and strategic planning can turn challenges into opportunities.
[31:25] Bo Hanson:
Bo encapsulates the episode's essence: "Investing does not have to be scary. Money is nothing more than a tool that allows us to achieve the goals that we have." He advocates for educated, well-prepared investing to lead a fulfilling financial life.
[31:52] Brian Preston:
Brian concludes with timeless investment wisdom: "Be fearful when others are greedy and greedy when others are fearful." He assures listeners that with the right strategies, they can thrive even amidst market fears.
Key Takeaways
- Diversification is Crucial: Spread investments across various asset classes to mitigate risks.
- Maintain Emotional Control: Avoid making impulsive decisions driven by market fears or hype.
- Long-Term Perspective: Focus on long-term growth rather than short-term fluctuations.
- Stay Informed and Educated: Utilize reliable resources and continuously educate yourself on financial strategies.
- Have a Sound Financial Plan: Prepare for unforeseen events with emergency reserves and clear financial goals.
Brian Preston:
"Know your why with your money and what you expect out of it. And you can actually use it as a really powerful engine to create the wealth and the life that you're dreaming for."
Bo Hanson:
"The more educated and more well prepared you can be for the unknown unknowns, the more likely you are to have a consistent plan that you stick to over the long term."
For more insights and resources, visit Money Guy Show and explore the tools designed to help you build and safeguard your wealth effectively.