How to Navigate a Crash in Stock Market
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How to navigate a crash
The KSE-100 has crashed seven times since 2000. This is the bonus lesson from the 40-minute video: what a crash looks like from the inside, and what to do in each part of it.
Seven crashes since 2000
The real KSE-100 record: seven falls of 20% or more.
From January 2000 to October 2026 the KSE-100 fell 20% or more from its highest close seven times. Each time, it came back above that high, except the 2026 fall, which had not recovered by 5 October 2026.
| Crash | High (close) | Low (close) | Fall |
|---|---|---|---|
| 2000–01 | 22 Mar 2000 2,054.42 | 2 Oct 2001 1,075.16 | −47.67% |
| 2003 | 16 Jan 2003 2,955.52 | 27 Feb 2003 2,356.47 | −20.27% |
| 2005 | 15 Mar 2005 10,304.72 | 27 May 2005 6,467.15 | −37.24% |
| 2006 | 17 Apr 2006 12,273.82 | 14 Jun 2006 8,768.95 | −28.56% |
| 2008–09 | 18 Apr 2008 15,676.34 | 26 Jan 2009 4,815.34 | −69.28% |
| 2017–20 | 24 May 2017 52,876.46 | 25 Mar 2020 27,228.80 | −48.50% |
| 2026 | 23 Jan 2026 189,166.83 | 9 Mar 2026 146,480.15 | −22.57% |
The full story of every one of these crashes is in the PSX major crashes article and the 40-minute video. This page is the bonus lesson: how to act when the next one comes.
Markets move in waves
Above the line, below the line, and back.
Any financial market, the stock market included, moves like a wave. It climbs along a main line over the years, but it never moves in a straight line: sometimes it is above that line, sometimes below it.
When the market dips a little below its line, that is usually called a correction. Many people call it a dip and say “buy the dip”. When it falls more than 20% below, I call it a crash.
A crash is also an opportunity. If you can get through the bad months and you can afford to stay invested, the returns that are made in crashes and dips are rarely made again.
Inside a crash: down, bottom, up
Zoom into one crash and it has three parts.
Zoom into a single crash and the shape is a V. First a downtrend: the market makes lower highs and lower lows. Then a bottom. Then an uptrend: higher lows and higher highs.
People who know technical analysis draw support lines under the price. In a crash the market breaks one support, falls to the next, breaks that too, and finally hits a level that it touches again and again without breaking. That is where the bottom forms.
Nobody can predict the bottom. Nobody knows where the last fall will stop. Support lines give a glimpse, not a guarantee; there is no hard and fast rule. So do not try to catch the bottom.
In the downtrend: keep the SIP going
Style 1: a fixed amount, every month.
A SIP (systematic investment plan) means putting the same amount in every month, on the same date. While the market is falling, the same rupees buy more shares each month.
In the experiments from the main video, the SIP did best while the market was in its downtrend: the most efficient and the least risky of the options tested. So through the fall, quietly keep doing your SIP.
Lump sum at the bottom?
The highest return, and the highest risk.
When the market stops going lower and keeps holding one support level, putting a lump sum in at that point gives very high returns, if that really was the bottom.
Extremely risky. I do not recommend it. You can never be sure it is the bottom. If you buy thinking it is the bottom and the market falls further, you get stuck. If you have a lot of extra money lying idle and you want to take that risk, that is your choice; it is not my recommendation.
The better way: wait for the signs
What to look for before you add more.
It has touched the same level and held it.
No new lows below that level.
The panic is fading.
The most important point of all.
There are many economic indicators to watch. Two of them are the interest rate and the current account, and there are many more.
Keep following Doctor Finance to learn which indicators tell us the economy is doing well, one by one.
After the bottom: double the SIP
Style 2: when the market starts to turn green.
Once the bottom has come, economic indicators have improved, emotions have improved and the market slowly starts turning green: if you have the capacity, double your SIP. Done this way, you get through the whole crash with the highest possible profits.
Never touch your emergency fund. Not for a lump sum, not to double the SIP. Only money you can leave invested goes in.
When the market reverses, not only do the losses turn positive, you can come out with a real profit.
In summary
How to navigate a crash.
Market coming down: SIP is the best option. Keep it going quietly.
At the bottom: a lump sum can pay the most, but it is extremely risky. Better not.
Market going up, indicators better: double the SIP if you can.
Always: never use your emergency fund.
Have an argument or an objection? Comment below. Discussion is always open.
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Enroll NowCrash figures checked against the KSE-100 database (PSX and Investing.com daily closes) on 25 October 2026.
Check it yourselfWhere the crash figures come from 3 links
Every crash figure is a daily closing value of the KSE-100. A crash is counted as a fall of 20% or more from the highest close since January 2000, lasting until the index closes back above that high.
Closes read 20 Sep 2026 (Investing.com) and 5 Oct 2026 (PSX). All the other charts on this page are drawn to explain an idea and are labelled as illustrations.
Educational content only. Not investment advice and not a recommendation of any company, fund, broker or security. All investment carries the risk of loss, including the loss of the money you put in. Past crashes and recoveries do not guarantee what the market will do next.