What to expect if the stock market does crash next year, and HOW to prepare

PL

Paula Luckhoff

9 December 2025 | 20:20

2025 has been punctuated by warnings that global stock markets are in a bubble that could be ready to burst. Personal finance guru Warren Ingram shares valuable pointers and advice.

What to expect if the stock market does crash next year, and HOW to prepare

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For investors, 2025 has been punctuated by warnings that global stock markets are in a bubble that could be ready to burst.

This concern is linked particularly to what's been the fast-rising share prices of American tech companies.

A stock market bubble is described as when share prices of stocks rapidly keep climbing to a point where they far exceed their intrinsic value or their earnings.

Ever the voice of reason, Galileo Capital's Warren Ingram points out that investors love to anticipate events, often spending huge amounts of time and effort trying to predict what will happen to their investments in the next year.

The reality is that no one knows what will happen, he says. However, we can review the past to give us an idea of what might happen.

Ingram makes two key points - that markets fall, and that averages can be misleading.

1. Markets fall often:

On average, markets fall in one out of every four years. 
The average down year is about 13%, so if you start the year with R1m, you will have R870,000 by the end of the year.
The fall can be bigger - in 2008 it was nearly 40% so you would have started with R1m and ended the year with a bit more than R600,000.
In every year, even when markets are up, there will be a period where the market will fall, this averages 10% from the high to the low.

2. Averages hide a lot of noise:

If you expect stock market to deliver the average growth next year, you are almost certain to be disappointed.
Over a long period, you can expect the stock market to grow by 10% to 12% per year.
BUT it almost never delivers that exact number in a year.
You are more likely to see a sequence of 20%, 28%, -15%, 14%, -1%
That means you should expect a range from -13% to 21%. 
If you can handle this type of volatility every year, you will be more prepared for what is coming.

If there is a big crash, the best thing to do is to ride it out, says Ingram.

Markets typically recover very quickly after a crash and most of the recovery happens in the first two years, he explains. "If you remain invested during the crash, you will see losses on your statements for a time and then things start to turn."

What to do NOW
  • Ensure that your asset mix is correct - if you have too much in shares, reduce your allocation to the appropriate amount.
  • Make sure that you are not over-exposed to the tech sector.
  • The rest of the world (outside of the US) is not too expensive: Make sure that you have a good allocation to global investments, including South Africa, because these are better valued markets.

Scroll up to the audio player to listen to Warren Ingram's detailed advice

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