Monday 19 October, 1987, is known as 'Black Monday' after stock markets worldwide plummeted in a single day.
The momentous moment in history caused markets around the globe to crash - the Dow fell 22% that day - and in the following weeks major indices continued to tumble, with Hong Kong's stock market 45% lower by the end of October.
Twenty-five years on, the global economy faces a new set of challenges - including a eurozone debt crisis, and a slowing China.
But how should investors cope if the unthinkable happens again?
10 ways to cope with a market crash
Tom Stevenson, investment director at Fidelity Worldwide Investment, highlights ten lessons to learn from the 1987 crash.
1. Keep calm and carry on – the FTSE 100 ended 1987 higher than it started and within two years the index had surpassed its pre-crash peak. By the time you have recovered your equilibrium, the moment to sell has very likely passed and by panicking at this stage you will simply miss out on the subsequent recovery.
2. Look through the market gyrations to what is happening in the real world. The 1987 crash was triggered by over-exuberance (the market had risen by nearly 40% in the first nine months of 1987) and was then compounded by automated computer trading. The underlying economy was sound at the time – hence the quick recovery.
3. Take a long-term view. The 1987 crash looks insignificant on a long-term chart today even though, at the time, it felt like the end of the world.
4. Be prepared for the worst and do not put all your eggs in one basket. I was in Hong Kong at the time of the 1987 crash – the market there shut for a week, emphasising the point that emerging markets can sometimes be markets from which it is difficult to emerge in an emergency.
5. Don’t try to time the market. When your emotions are running high you will make the wrong investment decisions because our brains are hard-wired to run from danger. The best investors do the reverse – they walk towards danger, albeit with their eyes wide open.
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