Talk of an S&P 500 Index (SP: .INX) (and ASX ) stock market crash has been persistent over 2025 to date. Not that this sentiment is uncommon. Whenever markets have an uncommonly good year, as they have in both 2024 and 2025, investors start to get nervous.
To be fair, there have arguably been more reasons for investors to be fearful this year than there have been for a while. Many of them can be attributed to the erratic trade and economic policies coming out of the United States of America.
President Donald Trump has openly mused about undermining the US Federal Reserve by sacking board members, and the governor Jerome Powell, for one. Then there was the shambolic 'Liberation Day' tariff announcements, which caused a dramatic stock market dip until they were wound back a week or so later.
Investors have also had an uncertain interest rate and inflation environment to navigate. Interest rate sentiment has seemingly swung from 'the next move will be down' to 'rates might rise' and back again.
Amid all this uncertainty, the S&P 500 (particularly any stocks associated with the 'AI boom'), the S&P/ASX 200 Index (ASX: XJO), gold, and Bitcoin (CRYPTO: BTC) have all hit new record highs, with plenty of bumps in between.
Over just the past month, the S&P 500 has both fallen more than 5% and rebounded by 4.2%.
No one seems quite sure what's around the corner.
And, the truth be told, no one is. None, not Warren Buffett, Jerome Powell, Donald Trump, your neighbour Joe, or this writer, can predict what the markets will do next. The next market correction or crash is always inevitable. We just don't know when it will occur.
All we can do is prepare.
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How to prepare for an S&P 500 market crash
I think the best way to prepare for a market crash is by auditing your own investments. The whole point of investing is aligning our financial interests with companies that will be larger in the future than they are today. If you don't believe a company is set for future prosperity, it shouldn't be in your portfolio. If you do think a company is setting itself up for future success, it should be. Regardless of what the S&P 500, the price of gold, or any other metric is doing.
For example, I own companies that I would be comfortable, and more than happy to hold during a market crash. Names such as Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES), Mastercard Inc (NYSE: MA), and Procter & Gamble Inc (NYSE: PG) have strong balance sheets and fantastic, resilient business models. They will do just fine in any economic conditions. In my view, anyway. No matter what happens in the next year, I have literally put money on them being larger and more successful in the years and decades to come.
There are two things we do know about the stock market, both the S&P 500 and the ASX. The first is that it goes up far more often than it goes down. The second is that it has never failed to exceed a previous all-time high.
I think all investors would be better off if they kept those facts in mind and worried less about when the next market crash will be.
