Study Finds 1 in 5 Chance of Another Black Monday-Style Stock Market Crash Within 30 Years

In 1987, the Dow Jones Industrial Average experienced its worst ever one-day drop of 22.6%. While unlikely, another crash of this magnitude could happen again someday.

Research shows there's a 1 in 5 chance of a 22.6% single-day Dow drop in the next 30 years. The model aligns with historical crashes.

Crash frequency can be predicted over long periods, but not exactly when crashes will occur. Still, investors can plan for potential crashes.

Nassim Taleb advocates putting 85-90% in safe investments like T-bills, and 10-15% in speculative bets like leveraged options.

Another strategy is substantially investing in equities while allocating the remainder to S&P 500 put options as crash insurance.