How To Prepare For A Market Crash: Three Fundamental Options

Finance-focused summary (market crash preparation + 3 options)

Macro / market context & historical analog

The video frames today’s concern as a possible repeat of the late-1990s internet bubble:

• S&P 500 peaked around ~1,500 in Aug 2000.
• The effective Fed Funds Rate rose from 5.45% to 6.5% over the same period.
• After the snapdown, the S&P 500 fell ~45% to about 840 in Feb 2003 (bottoming after ~2.5 years).
• The Fed then cut rates; effective Fed funds fell to ~1% in 2H 2003.
• Recovery: by mid-2007, the S&P 500 climbed back above 1,500.
• GFC: from Oct 2007 to Mar 2009, the S&P 500 dropped again by about ~50%, bottoming just above ~750 (Mar 2009).
• Policy stayed near zero for ~7 years, until about Dec 2015; the market didn’t fully exceed prior peaks until early 2013.

Key takeaway: for retirees / near-retirees, the issue isn’t only the drawdown—it’s the length of recovery (described as a “lost decade” / roughly 13 years from Aug 2000 to May 2013 to surpass prior highs).

Company valuation example (bubble risk via losses)

SpaceX is cited as a modern “bubble-like” comparison:

• Valued at $2.1 trillion on the first day of trading (June 12, 2026).
• Disclosed losses:
  • $4.9 billion for full year 2025
  • $4.3 billion for the first three months of 2026
• Caution wording: they “have a history of net losses and may not achieve profitability in the future.”

Performance / risk disclaimers explicitly stated

• “Past performance is not indicative of future results.”
• No one can predict with 100% certainty whether a crash will happen.
• No “crystal ball,” and “you can’t time the market.”
• Explicit product risks: annuities/structured products require attention to contract terms and point-to-point (maturity-based) protection.

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Framework / methodology implied: “3 scenarios” to protect (and the trade-offs)

The speaker lays out three practical scenarios/options for investors worried about a sharp downturn and/or long bear market. The structure emphasizes trade-offs between:

• keeping equity upside,
• locking in guaranteed income,
• protecting principal.

Scenario 1 — Protect principal / downside

Recommendation options mentioned

• Exit equities and park in cash or safe fixed income:
  • Treasuries
  • CDs
  • “somewhat similarly safe bonds”

Yield context (as of recording date: June 13, 2026)

• Treasuries yielding ~3.7% to slightly below 5%, depending on maturity.

If you want downside protection while retaining some equity upside

• Fixed Indexed Annuities (FIAs) / “Fias”
  • Principle protection: 100%
  • Example upside participation: up to 8.75% for one year (time of taping)
  • Noted as less liquid
• Structured protection ETFs
  • More liquid (can buy/sell during market hours)
  • Typically lower caps than FIAs
  • Example ETF:
    • Calamos Investment Structure Protection ETF (CPSU)
    • Launched June 1 (year implied 2026)
    • 1-year cap rate: 6.57% for the S&P 500 net of fees

Caution

• Protection works “as intended” only at maturity (“point-to-point”), similar to how bonds return face value at maturity.

Scenario 2 — Lock in guaranteed income for life (near/at retirement)

Recommendation options mentioned

• Single Premium Immediate Annuity (SPIA)
  • Convert a lump sum into a guaranteed monthly check for life.

Other ways to build guaranteed income

• Treasury bonds and similarly safe bonds
• CDs
• Multi-year guaranteed annuities (MYGAs)

Caution / limitation

• Ladders are described as not truly “for life,” effectively limited to about a 30-year horizon (longest treasury maturity “for all practical purposes”).

Scenario 3 — Lock in future guaranteed lifetime income now (a few years before retirement)

Recommendation options mentioned

• Fixed Indexed Annuity (FIA) with an income rider (“income writer”)
  • Intended benefits:
    • Protect principal 100% against downturns
    • Participate in upside through surrender value mechanics
    • Lock in future minimum guaranteed lifelong income at current rates
    • Flexibility: income may be turned on later; income base can grow by delaying
  • Example contract feature:
    • Potential guaranteed rollup rate up to 9% annually for up to 10 years (as mentioned)

Illustrative example

• Couple aged 65 and 66
• Invest $100,000 into an FIA with income rider in June
• Delay income for 7 years
• Expected lifelong guaranteed income: $12,796 per year starting in year 8

Cautions / disclosures

• FIA complexity and customization depending on state, age, insurer rating.
• Illustrative example “as of June 5, 2026 for an A+ rated insurance company.”
• Rates/conditions are not locked until contract signing.
• They do not “force you to take income,” and cash-out of surrender value may be possible after an initial minimum maturity period of the contract.

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“What’s our perspective?” (3 fundamental options)

The presenters argue AI productivity may be real, but bubbles and setbacks are possible. They emphasize you must choose because you can’t fully have all goals simultaneously.

Option 1 — Stay invested for full upside

• If the investor has time and risk tolerance to sit out a crash/bear market for 10–15 years:
  • Remain in broad equity indices:
    • S&P 500
    • NASDAQ
• If concern is not the bubble but inflation, they suggest equities as “real assets.”

Option 2 — Lock in future income at current rates (base/essential expenses)

• For those already retired or retiring in about 5–7 years:
  • Create a “safe, stable, predictable base” with annuity/treasury approach:
    • treasury ladder and/or SPIA (if income needed now/near)
    • FIA with income rider (if income needed in a few years)
• They characterize it as a “golden moment” for FIAs with income rider while rates are attractive.

Option 3 — Protect against a crash (principal preservation)

• Traditional approach:
  • Move to cash and/or treasuries and safe fixed income.
• Alternative crash-protection vehicles:
  • FIAs and structured protection ETFs (again emphasizing liquidity difference vs annuities)
• Mixing strategy suggested:
  • Use an FIA with income rider for base income
  • Use a highly liquid structured protection ETF for part of the “boost” portfolio

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Key instruments / tickers / assets mentioned

• Indices: S&P 500, NASDAQ
• Rates: Effective Fed Funds Rate
• Treasuries (no specific maturity)
• CDs
• FIAs (Fixed Indexed Annuities) (income rider/income writer referenced)
• SPIA (Single Premium Immediate Annuity)
• MYGA (Multi-year guaranteed annuities) (spelled “MIGAS” in subtitles)
• Structured protection ETF: CPSU
• SpaceX (company example)

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Key numbers called out

• S&P 500
  • Peak ~1,500 (Aug 2000)
  • Bottom ~840 (Feb 2003), about -45%
  • Bottom just above 750 (Mar 2009), about -50% from late-2007 highs
• Fed funds
  • 5.45% → 6.5% (Aug 2000 period)
  • ~1% in 2H 2003
  • ~0% for ~7 years until Dec 2015
• Timeline analog:
  • ~13 years (Aug 2000 to May 2013) to exceed prior highs
• Current-date context (video taping):
  • June 13, 2026 mentioned repeatedly
• Yield example:
  • Treasuries ~3.7% to <5% (depending on maturity)
• Structured ETF example:
  • CPSU: 6.57% cap rate (1-year, S&P 500 net of fees)
• FIA cap example:
  • Up to 8.75% for one year (example at taping)
• Income example:
  • Invest $100,000
  • Start payouts after 7 years
  • Income: $12,796/year from year 8

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Disclosures / disclaimers

• “Past performance is not indicative of future results.”
• “No crystal ball / cannot time the market.”
• Product protections are maturity-based (point-to-point); downside protection only works as intended when held to maturity.
• FIA example is illustrative only; rates/conditions depend on state, age, and insurer rating.
• They encourage viewers to contact specialists; not presented as a formal legal “not financial advice” statement in the subtitles, but uncertainty and customization are repeatedly emphasized.

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Presenters / sources mentioned

• Marcus (presenter/author with “Marcus and I”)
• Jennifer Diamond Nestic (named in the email/discussion context: jenniferdiamondnestic.com)
• Morningstar (source of historical market chart data)