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Glossary entry · Trade-offs
Crash
Definition
A rapid, severe decline in asset prices, typically 20% or more, that happens over days or weeks (vs months or years for a bear market). Often triggered by a specific shock — a financial crisis, a pandemic, a war. Painful in the moment, but historically followed by recoveries within a few years.
Example
The March 2020 crash saw the S&P 500 fall 35% in 33 days, then fully recover by August.
Related
Trade-offs
Risk
The chance that an investment loses value — and how much it could lose.
Read →Volatility
How wildly an investment's price moves up and down. High volatility = bigger swings.
Read →Diversification
Spreading money across many different things so no single one can sink you.
Read →Bull & bear market
Long stretches of rising prices (bull) or falling prices (bear). Both end, eventually.
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