If the Next Market Crash Mirrors 2008, Here’s How Much the Average Portfolio Could Lose

Core Insights - The 2008 financial crisis was primarily caused by a collapse in the American housing market and a significant stock market decline, leading to high unemployment and the Great Recession [1] - The next economic downturn is anticipated to stem from tech stocks rather than a mortgage crisis, with the S&P 500 heavily weighted towards technology and AI-related companies [2][3] Group 1: Market Dynamics - The S&P 500 experienced a drop of over 50% during the 2008 crisis, indicating the potential severity of losses in a future downturn [5] - Current market growth is largely driven by technology and AI, raising concerns about a possible market crash if these sectors fail to deliver expected returns [3][6] Group 2: Portfolio Considerations - Average portfolios today could potentially lose up to 50% of their value in a market crash, depending on their diversification [4] - A diversified portfolio, which includes a mix of ETFs, bonds, and digital assets, is more likely to withstand market downturns compared to portfolios heavily concentrated in tech or AI [5]