If the Next Market Crash Mirrors 2008, Here’s How Much the Average Portfolio Could Lose

The severe financial crisis of 2008 was driven by a massive collapse in the American housing market along with a stock market nosedive — an economic downturn of subprime mortgage crises and credit crises that resulted in devastating unemployment and the Great Recession.

It was one of the sharpest stock-market drops since the Great Depression, a plunge that was debilitating to investors as stock portfolios lost approximately 50% of their value. While that crash stemmed from the housing market, the next downturn in America’s economic cycle likely will not be a mortgage crisis.

“The next crash is likely going to come from tech stocks, with the S&P 500 being so heavily weighted to nine stocks which are technology [and] AI-related,” Vince Stanzione, CEO and founder at First Information, recently told GOBankingRates.

Additionally, Arie Brish, author of the business book “Lay an Egg and Make Chicken Soup,” confirmed to GOBankingRates that “the growth in the stock market today is largely driven by technology and the hyper-optimism of AI, very similar to 2000[‘s dot-com market crash].”

Given how America’s current stock market — especially the S&P 500 — leans heavily towards technology and AI companies, a market crash is possible if AI and Big Tech fail to deliver rapid returns to investors, similar to the housing market downturn of 2008.

That begs the question: Just how much could the average tax portfolio lose were a similar crash to happen now?

How Much the Average Portfolio Could Lose in the Next Crash

Eugenia Mykuliak, founder and executive director of B2PRIME Group, said modern portfolio losses would depend primarily upon how diversified those portfolios are, but could lose as much as 50% of their value.

“If we go by equity,” she noted, “then back in 2008, the S&P 500 fell from its peak by more than 50%, and many investors who were concentrated there suffered similar losses.”

However, Mykuliak added that the average portfolio today is “often more mixed: Many investors hold ETFs, bonds and even digital assets. That kind of diversification doesn’t mean they’ve become completely ‘crash-proof’… but it does help in terms of providing a safety net.”

A diversified portfolio, as opposed to one skewed heavily towards a single interest such as AI or tech, is far more likely to resist the impact of a market crash.

Learn More: 3 Safest Investments To Hold in the Current Trump Economy

Find Out: 6 Safe Accounts Proven To Grow Your Money Up To 13x Faster

A modern portfolio primarily invested in AI and tech, though, could be devastated by a crash.

“The danger is that a few AI tech giants hold too much wealth,” Julia Khandoshko, CEO of Mind Money, told GOBankingRates. “If a correction hits as big as in 2008, a portfolio based on the S&P 500 and Big Tech could drop half its value or even more, because the index is really focused on a few companies, such as Nvidia and Microsoft.”

Khandoshko also concurred with Mykuliak’s assertion that diversified portfolios are more protected, adding that “People who have different types of portfolios that mix stocks, bonds, commodities and metals might not lose as much, something like 20 to 25%. This is what exactly happened in 2008 with balanced portfolios.”

As in 2008, a 2025 diversified portfolio can protect an investor from more extreme losses. Investing beyond AI can help to minimize the impact of a Big Tech crash on your portfolio, should such a crash occur.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: If the Next Market Crash Mirrors 2008, Here’s How Much the Average Portfolio Could Lose