I started investing back in 1986/87, buying my first shares soon after turning 18. Hence, I’ve been buying and owning companies for nearly 40 years. During those decades, I witnessed four major stock market crashes.
Market meltdowns
My first stock slump was 19 October 1987, known as Black Monday. That day, the Dow Jones Industrial Average index collapsed by 22.6%, its largest-ever one-day percentage fall. Despite the FTSE 100 plunging that month, it actually closed up 2% in 1987.
My second stock market crash was the bursting of the dotcom bubble in 2000/03. From end-1999 to end-2002, the Footsie lost 43.1% of its value, finally bottoming out in March 2003. (One fantastic Fool headline at this very low was “FTSE 3,287: Time to Buy”, perfectly calling the bottom of the market.)
My third bout of market madness became the global financial crisis of 2007/09. As American house prices crashed and US stocks tumbled, the global fallout left the FTSE 100 31.3% lower in 2008.
My fourth big share slide came in 2020, as Covid-19 infections multiplied. With the US and UK stock markets down 35% from previous highs, my wife and I heavily bought cheap shares in spring 2020. The subsequent returns have been fabulous.
Here comes the crash?
In my experience, stock market crashes usually happen when share prices get so high, they disconnect from reality. Right now, the US S&P 500 index is expensive on almost every valuation measure. Yet, stock prices keep rising, propelled upwards by huge flows of money, especially into low-cost index-tracking funds and mega-tech stocks.
Will the market crash in the final quarter of 2025? I admit to the possibility, especially given that October has historically been a terrible month for stock markets, notably in the Great Crash of 1929 (and in 1987). But given the massive flows into mega-cap US stocks, I don’t see a 20% correction in what’s left of 2025. But 2026 is a different matter…
Hidden value?
Though I see the US stock market as overvalued, I’m not dumping American shares from my family portfolio. Instead, I’m hunting for hidden value in the S&P 500. One candidate that stands out is Target Corp (NYSE: TGT).
Target is one of America’s largest retailers of general merchandise, selling through almost 2,000 big-box stores and online. However, while larger supermarket chains have boomed, Target’s sales and margins are suffering.
As I write, Target stock stands at $88.01, valuing this business at $40.4bn. At its 52-week high, the share price hit $161.50 on 15 October 2024, before crashing to a low of $86.30 on 22 September 2025. It’s plunged 42.2% over one year and 44.7% over five years (excluding cash dividends).
After this share-price plunge, Target stock trades on 10.4 times trailing earnings, delivering an earnings yield of almost 9.7%. Also, its dividend yield has soared to 5.1% a year — a level rarely seen among large-cap US stocks.
To me, these fundamentals suggest this stock is deep into bargain bin territory. Then again, who can say when quarterly sales will stop sliding — and when revenues, margins, and profits will return to historic norms? Nevertheless, if my family portfolio didn’t already own this stock, I’d like to buy it — perhaps during the next stock market crash!
