Survive a Market Crash! How We Thrived After 2 Financial Meltdowns

For many young investors, and those new to the FIRE movement, the stock market may seem like an easy way to significantly grow your money.  If you started investing after 2009, then you only know about bull markets (or increasing markets).  

As of this writing, we are still in the midst of the longest bull market on record (however, we’re starting to see a lot of volatility).  The current bull market officially started on March 9, 2009, and has risen over 300% in the last 9 years.  So if you had $10k in the market in 2009, it would be worth over $30k today, even if you didn’t add an additional penny along the way.


But what if, like us, you were investing well before this bull market?  We started investing in the stock market in the late ‘90s, and I can tell you it was a much bumpier and more turbulent ride from 1998 to 2009.  

The Dotcom Crash & Great Recession

We experienced two major market crashes in that 10 year period:  the Dotcom Crash (2000 - 2002) and the Great Recession (2008 - 2009).  The losses during those bear markets were pretty staggering.  

During the Dotcom Crash, the S&P 500 declined by 50% and the NASDAQ retreated by 78%.  Allison and I were only 30 years old, and we had just bought a house in San Francisco before the crash.  Then I got laid off from not one, but two Internet startups!

The Great Recession saw the S&P 500 drop by 58%, almost 8 million Americans lost their jobs, 2.5 million businesses shuttered, and millions of homes foreclosed.   We had just bought a brand new condo before the housing crisis hit, but this time we hadn’t sold our previous home, so were stuck with two huge mortgages.  Oh, and then I came down with double pneumonia that sent me to the ICU for 10 days and almost killed me!

Is this meant to scare you?  Actually, yes!  You should have a healthy fear of the markets and an understanding of their cyclical nature.  Imagine your nest egg in free fall over a period of one or two full years with no bottom in sight. Fortunately, what goes down eventually comes up (and down again, and up again...).

The good news is that there are strategies you can use to get you through those dark bear markets.  Here are 8 tactics we used to not only survive these major market crashes, but also thrive afterwards...  

1 - Stay the Course

When the next big bear market comes, the last thing you want to do is panic and start selling all your investments.  If you do that, you’re going to be selling low and then buying back in at a higher price later.

Sure, in a perfect world you would be able to determine when the market is at the bottom and get back in then.  But we all know nobody can predict the markets with that kind of accuracy. Even financial legends Warren Buffett and Jack Bogle (founder of Vanguard) agree on a long-term buy and hold strategy.

"Stay the course. Don't let these changes in the market, even the big one [like the financial crisis] … change your mind and never, never, never be in or out of the market. Always be in at a certain level."  -- Jack Bogle

Both times we faced a bear market, we continued contributing to our retirement accounts at the exact same level and frequency as before.  And with the power of Dollar Cost Averaging, we were then purchasing those investments “at a discount.”

If funds are tight and you cannot afford to keep putting money in the market, then at a minimum, slow down on your investing and try not to sell. You will probably sell at a loss, and that will make it that much harder to get back in when the market rebounds.

2 - Improvise

When I got laid off from my second dot-com job within a year in 2001, I needed to figure out a way to earn money.  The hiring landscape for Internet workers was bleak at that point, especially for someone in marketing (we’re typically the last to be hired and first to be let go).

So I did what any entrepreneurial person would do, I started my own home business.  I bought some software to create products related to people’s names and birthdays, and I opened up an online gift store called Younique4U Gifts.  I didn’t make a lot of money, but I earned enough to help keep up with the bills (and I got some valuable experience running a small business).

When the Great Recession hit in 2008, Allison and I had just bought a brand new condo in San Francisco.  We had planned to sell our existing home right after buying the condo, but the market literally dropped in between!  (Huge lesson: Don’t ever buy a new property before selling the old one first!).  So what did we do? We became landlords until the housing market rebounded and we could sell one of our properties.

The point is, when disaster strikes, become resourceful.  Is there a way to earn some extra cash (Uber, Airbnb, etc) or cut back on expenses?

3 - Hunker Down

When the 2008 Recession hit, Allison and I were both at the peak of our careers.  We had good jobs after working our way up the ladder over the previous 10 years.

Allison was a Sr. Technical Project Manager at Stubhub and I was the VP of Online Marketing at Lumosity.  So when all the markets crashed, we hunkered down and put our noses to the grindstone to make sure we kept our jobs.  We avoided news about the stock and housing markets, didn’t look at our 401(k) statements, and became the best landlords we could be to keep our paying tenants in place.  

It was also time to tighten the expense belt, especially for luxury items.   We didn’t make any big purchases or go on any long trips during the down times.  Instead, we occasionally treated ourselves to long weekends or a nice night out. Since we were always naturally frugal, it didn’t seem like a major hardship to keep major expenditures in check.

You can do the same thing.  When financial times get tough, do what you can to keep your income and benefits coming in, and look for ways to trim your budget.  

4 - Look for Opportunities

After about a year making a small income with Younique4U Gifts, I decided it was time to get back in the workforce.  It was 2002, and not many Internet companies were hiring, but I created a strategy to get my foot in the door.

I interviewed with a company called Emode (later changed to Tickle) who had just launched an online IQ Test.  They wanted to test it in the marketplace but didn’t have the hiring budget for a full-time marketing person.

Here’s how it went down:

Me I realize you don’t have budget for a full-time role, so why don’t you pay me on a commission basis? Give me 40% of all the sales I generate through my marketing campaigns.

Since it was a digital product with no cost to produce, they were happy to keep 60% of any sales I got them. Long story short -- I hustled and ended up making more money on those commissions than any other full-time employee at the company (including the co-founders).

My boss, Rick (2 months later):  OK, why don’t we look at what a full-time salary would be for you.

While moving to a salaried position actually paid less, I took it because it was guaranteed income (plus benefits). Sometimes you have to find little nuggets of opportunity when times are tough. Think outside the proverbial box and look for some non-traditional ways of earning and saving money.

5 - Diversify

One of the most important strategies to minimize the effects of a major downturn is to be diversified -- with your investments and your sources of income.

Over the years, we’ve used a number of strategies to diversify our investments, using a mixture of stocks (US, International, large cap, and small cap), bonds (US and International), Real Estate, cash, and other smaller vehicles (REITs, precious metals, and cryptocurrency).

We have also developed and earned income from a number of different income streams, including full-time jobs, contract work, rental property income, stock dividends, and profits from our side businesses.

The more diversification you have, the better your chances of not losing everything in a major downturn.  

6 - Become Invaluable

The reason Allison and I were able to keep working during the Great Recession is that we had developed valuable experience in our respective fields.  Allison became an expert Technical Project Manager from years working at Accenture and eBay, so she was a key employee at Stubhub during the market crash (at one point, Allison was working over 60 hours a week to prove her worth to the company).

After a decade as an online marketing professional and having helped Tickle get acquired by Monster, my skills were in high demand.  I was able to secure a great role as VP of Online Marketing at Lumosity, helping them launch their brain game program.

You’re never guaranteed to keep your job in a major recession, but if you make yourself as valuable as possible, then you stand a good chance of maintaining your position (or finding another one).

7 - Have Protection

I mentioned that I came down with double pneumonia in 2009, towards the end of the Great Recession.  The doctors were never able to determine how I got it, but I think that perhaps all the financial stresses affected my immune system.

Whatever the case, I made it out alive, but my medical bills were over $200k!  Thankfully, I had really good health insurance through my employer, so my total out of pocket expenses were only about $3k.

The key is to make sure you always have health insurance.  You can be in the best shape of your life and still get hit by a bus or come down with a random illness.  Also, make sure you have sufficient liability insurance, property insurance, and legal protection for any businesses you may own.

The last thing you want is to be hit with a catastrophic accident or lawsuit that you’re not covered for, while your investments are in freefall.

8 - Put Things in Perspective

So far we’ve gone over strategies for safeguarding your income and investments during major financial crashes.  But it’s just as important to prepare yourself mentally and emotionally for these downturns.

One way is to look at the broader picture and put everything into perspective.  I learned this the hard way after surviving my pneumonia. When you survive a near-death experience, you realize how trivial most of our daily fears and concerns are.

I was so elated to get out of ICU and get back to good health, that money and possessions were no longer as important as I once thought.  I realized that the most important things were my health and my relationships.  

Even when the stock market is down, you can still focus on staying in shape (mentally and physically), spending quality time with family and friends, and being grateful for all the little things in your life.


We don’t know when it will happen or how severe it will be, but we all know that the markets will eventually decline.  What we can do is prepare ourselves to minimize the fallout.

It’s just like having an emergency preparedness kit for an earthquake, hurricane, or other disaster.  You hope for the best, but you prepare for the worst. And eventually the worst will be over, and you’ll be in great shape to reap the rewards of the next growth phase!

  1. […] but you have to take a much longer viewpoint. Allison and I were fortunate to survive through two big market crashes and bear markets.  Had we not stuck it out, we never would have been able to FIRE in our early […]