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Would a Stock Market Crash Be Good?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Bryce Tuohey
Updated 10/30/2026 7 min read
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I don’t know if there’s definitely going to be a crash, but all the signs point to it.

The problem is, we have so many newbies who don’t know market history.

They don’t think this can happen…

They might remember the COVID crash from March 2020 (but they also remember how fast it bounced).

They have no experience of an extended market crash.

For them, it’s always…

“Buy the dip!”

That way of thinking brings up one of the most important lessons you can ever learn….

In an Uncertain Market, Err On the Side of Caution

Last week we saw several big tech companies report earnings, only to get crushed by Wall Street.

Alphabet (NASDAQ: GOOGL) reported after the bell on Wednesday (Oct. 28). It dropped 13% and kept going…

GOOGL 10/28-30/26, 1-min candles
GOOGL 10/28-30/26, 1-min candles

Amazon (NASDAQ: AMZN) reported on Thursday and dropped 12%. It bounced but is still down…

AMZN 10/28-30/26, 1-min candles
AMZN 10/28-30/26, 1-min candles

The one that caught everyone by surprise was Intel (NASDAQ: INTC). It dropped 28% overnight.

By Friday’s close it was down even more…

INTC 10/29-30/26, 1-min candles
INTC 10/29-30/26, 1-min candles

The tech selloff dragged the Nasdaq lower by 2% for the week.

QQQ, 5-day, 1-min candles
QQQ, 5-day, 1-min candles

Again, I can’t predict whether a crash is coming.

But I do know that a lot of stocks are WAY overvalued.

If a crash does come, is it a good thing?

Here’s my take…

Why the Next Market Crash Could Be a Good Thing

I hope the overall market keeps going. And I hope the AI revolution keeps going.

But at the same time you have to look at the big picture.

Looking at it historically, everything is expensive.

That said, there are also reasons why a stock market crash would be good…

3 Benefits of a Market Crash

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A full-blown stock market crash would scare a lot of people.

You could make an argument that a healthy pullback and consolidation would be better.

But a crash in an overextended market has benefits (especially for day traders).

First, it would…

Flush Out Speculation from Overvalued Stocks

A market crash exposes overvalued companies and over-leveraged speculators.

“Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett

Image created with Google Gemini
Image created with Google Gemini

As penny stock traders, we’re used to the hype and speculation, right?

But some BIG companies and big traders have ridden hype a long way over the past couple of years.

That has led to newbies thinking stocks only go up.

A crash would reset valuations to more realistic levels. In other words, it wouldn’t take crazy math to make the valuations work.

Remember, if a crash comes it will…

Create Buying Opportunities

When there’s a huge sell-off, it creates great buying opportunities.

I’m not suggesting that you try to day trade INTC, or GOOGL with a small account.

But there are always plays.

For example, even in an ugly market on Friday, we had a play with AI OKTO Corp (NASDAQ: AIOK)…

Take advantage of the opportunities.

So many people are just HODLing overleveraged positions. If the crash comes, they’ll start panic selling.

If you sit on the sidelines and wait for opportunities, you have an edge. In the meantime, trade what’s moving.

Finally…

A Stock Market Crash Is Healthy

Frankly, I’m surprised that we haven’t had a market crash in a while. We’re overdue.

The reason valuations get so out of whack is due to speculation and excessive leverage.

For the past few years, it has paid to HODL most tech stocks. But in the long run, HODLing can be very dangerous.

A crash would wipe out a lot of newbies and HODLers. And it would be painful for some VERY big traders using leverage.

But it would also mean that strong companies with real revenue could lead the way back.

That’s how we get to new highs that are sustainable.

Catalyst Watch

Tomorrow’s midterms will clear up a lot of the uncertainty in the market.

Remember, the S&P 500 has risen in 19 post-midterm election years since 1950. If history rhymes, then we could see a big market rally in 2027.

All the more reason to stay safe now, right? That way you can take advantage of any potential bounce.

Key Takeaway

We’re due some consolidation. That’s always been good for the market in the long-run.

I’m sure most of the “real” companies building out AI will be fine. The technology will be fine.

And, yes, the economy will be fine over time.

Understand that even if a big crash does happen, there will be opportunities in the market.

All the more reason to apply for my Trading Challenge today.

Remember, preparation is key.

Are you prepared for what happens today, tomorrow, and next week?

Cheers,

– Tim Sykes

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”