It has been thirty years since the stock market crash of 1987. In that time we have seen many near crashes and even the crisis of 2008. Small crashes happen often, such as when the Dow dropped 1,100 points in August 2015.
Before that fateful day in October 1987, there were indications that the stock market was in a dangerous situation with wild ups and downs permeating the market for months before the day the Dow fell 22%.
There was no reason for the crash. No disasters. No governments toppled.
Certain that it is only a matter of time before the next big crash, the Oxford Club, a world-wide network of investors, has detailed what is needed in order to prepare for the next big market crash.
How does the Oxford Club recommend preparing for the next big crash?
Stock market jolts appear randomly, you should not be calm while trading stocks. A crash could happen in an instant. Some of the flash crashes that have occurred within the last few years were due, in part, to the computer algorithms dictating automatic trading. Algorithms that are still active today.
Anticipate bear markets, times when stocks do not rise as expected.
A third way to protect yourself is to diversify your investments. That way if a crash is segmented to one type of stock, you will be shielded from the brunt of the effects as your entire portfolio will be split among various stock types.