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A Market Crash Is Coming!
Hoxton Blog • A Market Crash Is Coming!
You heard right: A market crash is coming.
Maybe in five years, maybe in five months, maybe in five days. History guarantees the what, not the when.
Lately, the alarm bells are getting louder: the news has constant warning about stretched valuations and hidden leverage, and bank wobblers and accounting blow-ups have reminded everyone how quickly confidence can crack.
Meanwhile, the froth around AI and hot IPOs has split pros on whether we’re riding a durable earnings wave or inflating a bubble.
Add in episodic trade shocks and those two-day air pockets we’ve already seen this year, and the setup is familiar: the conditions for a break exist, even if the timing is unknowable.
That’s precisely why the bigger risk is hesitation. The cost of waiting can be greater than the cost of a downturn, because you can’t benefit from a recovery if you were never invested during the fall.
Timing the Market vs Time in the Market
One of the oldest debates in finance is whether you should try to “time” the market – get out before the fall, then re-enter at the bottom – or simply stay invested and ride the ups and downs. In practice, virtually no one does the first well.
- Even professional managers struggle to both exit and re-enter at the right moments. Getting one of these right is rare; getting both is nearly impossible.
- Markets can keep rising long after warning signs appear. Imagine a scenario where the market goes up 50%, then corrects by 25%. If you sat out entirely waiting for the “crash,” you would have missed most of that upside.
- In fact, many of the biggest gains in markets happen in short bursts. If you’re not in the game, you have no shot at riding them.
We see this in recent history.
In 2025, global markets were jolted by tariff shocks and trade tensions early in April – in the span of two days, the S&P 500 and other indexes declined sharply.
But that drop was followed by a rebound: by May, many indexes had erased losses and resumed upward trends. If you had been waiting on the sidelines, you would have missed that recovery.
Thinking you can spot every top or bottom is a fool’s errand. Instead, you should focus on being in the market long enough to capture growth over time.
The Psychology of Investing
Saying “I’ll buy when it drops” is easy. Doing so, especially when the news is terrible and everyone else is rushing to sell, is much harder.
When the market is in freefall, fear dominates. Even investors who vowed to re-enter at the “right level” often sit paralysed while prices recover.
History is littered with examples: ordinary investors wait until the worst is over – only stepping back in after the rebound is well underway. By then, much of the upside opportunity is gone.
You can’t benefit from a recovery if you were never invested during the fall.
It’s human nature to hesitate when things look bleak. That’s why investing needs discipline and a framework, so you don’t let panic override your long-term plan.
Cycles Are Normal – and Expected
No bull market lasts forever. No crash endures indefinitely. Every cycle contains both a boom and a bust.
Wise investors don’t view downturns as catastrophes to avoid at all costs, they treat them as inevitable phases in the journey.
- If you bail out at the first sign of trouble, you miss the eventual rebound.
- If you stay invested, you can ride through the bear phase into the next bull.
Over decades, the math of compounding works its magic, but only if you stay invested long enough to compound through both good and bad periods.
Why Now Still Matters
You might think, “I’ll wait for clearer signs, then jump in.” But that strategy comes with real cost.
- Markets look frothy right now.
AI valuations have surged, and IPO activity is booming. Some analysts warn of bubble-like conditions. Others are more sanguine, arguing that strong earnings and fund flows justify current valuations. But even if valuations are stretched, that doesn’t guarantee an immediate crash, it just increases vulnerability.
- If you wait, you may miss years of growth.
For instance: Walmart’s stock recently soared after unveiling a direct integration with OpenAI, reflecting how AI enthusiasm is rippling across sectors. If you’d sat in cash, you’d have missed that rally.
Meanwhile, concerns over AI overvaluation are real: the IMF has warned that markets, especially equities and credit, are “significantly overvalued relative to fundamentals,” raising the odds of a disorderly correction.
- The cost of waiting can be greater than the cost of a downturn.
Keep in mind: markets often overshoot on the upside before they roll over. Analysts at Morgan Stanley now warn the S&P 500 could suffer an around 11% correction if U.S.-China trade tensions worsen. Sitting out until the signs become obvious often means you’re late.
Balance & Protection
This is not a plea to go “all in” on equities blindly. Nor is it fearmongering. Rather, think in terms of balance, risk control, and optionality.
- Fixed-income assets or high-quality bonds can provide ballast. If interest rates fall, bond values typically rise, offering relief in sagging equity markets.
- Diversification: sticking to just high-flying sectors (e.g. speculative AI plays) heightens risk. A diversified portfolio across sectors helps guard against sector-specific crashes.
- Systematic entry: using staggered buys (dollar-cost averaging) can reduce “entry timing risk.” You don’t need perfect timing, just a consistent plan.
- Cash buffer for opportunity: having some liquidity can let you pounce on bargains post-crash – but don’t let that cash sit idle indefinitely.
In short: you can build in protection while still allowing your core portfolio to ride growth cycles.
Don’t Let Perfection Be the Enemy of Progress
Here’s the fundamental takeaway: yes, a market crash is coming. But betting on when it happens is a dangerous game.
You’re far more likely to suffer regret from missed gains than from holding through a downturn, especially if your portfolio is reasonably diversified and balanced.
“The cost of waiting can be greater than the cost of a downturn.
If you stay in cash until the signals are unequivocal, you may well miss the biggest long-term gains. You can’t benefit from a recovery if you were never invested during the fall.
That’s not to say every day is a perfect moment to buy. But staying on the sidelines, waiting for an elusive “perfect entry,” often results in missed opportunity.
The smarter path is to stay engaged, invest prudently, and be psychologically prepared for volatility.
I’m not trying to scare you. I’m repositioning fear into discipline. Because if history teaches us anything, it’s that markets crash, and they recover.
The real risk is opting out of the only game that matters: long-term compounding.
If you’d like to discuss your portfolio, review your long-term plan, or simply seek reassurance during uncertain times, reach out to our client services team at client.services@hoxtonwealth.com or through our global WhatsApp line at +44 7384 100200.
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