Gerd Kommer’s Core Rule for Crash-Proof Portfolios

In a YouTube interview with the channel “René will Rendite”, wealth manager Gerd Kommer delivered a blunt message to retail investors: the next stock market crash is inevitable, and the only sensible defence is a portfolio you genuinely do not panic during. Kommer’s framework is built around asset allocation – the mix of equities, bonds and other assets that determines most of a portfolio’s long-term behaviour.

He urges investors to plan for a worst-case scenario of a 40–50% market decline hitting without warning. “Set up your asset allocation so you can withstand a sudden crash of 40 to 50 percent,” he said. If the thought of such a drop would make you sell in fear or keep you awake at night, he argues, your current mix contains too much risk. The remedy is straightforward: reduce your equity exposure to a level your real-life nerves and finances can tolerate.

Kommer did not try to predict when a crash might occur. Instead, he framed bear markets as a permanent feature of equity investing. The advice is aimed at long-term savers who want to stay invested through all market cycles rather than trying to time exits and entries.

The Gap Between Imagined and Real Risk Tolerance

Why a 40–50% Decline Isn’t a Hypothetical

History shows that market drawdowns of that magnitude are normal. The global financial crisis of 2008 saw peak-to-trough falls around 50% for many major indices, and even the relatively brief COVID-19 crash in 2020 erased over 30% in weeks. Kommer’s number is not alarmist; it reflects what has actually happened within the investment lifetime of most adults.

The Behavioral Trap Most Investors Ignore

The central problem Kommer highlights is the mismatch between an investor’s stated risk tolerance – often measured by a short questionnaire – and their actual behaviour when real money evaporates. Research on investing behaviour consistently finds that people sell near market bottoms because the emotional pain of further losses outweighs their intellectual commitment to staying invested. By building a portfolio around a precise, painful drop scenario, Kommer aims to close that gap before the stress hits.

His approach also undermines the common hope that one can sidestep crashes through clever forecasting. Academic evidence – and Kommer’s own work on passive investing – suggests that trying to time markets reliably reduces returns for almost everyone. Accepting the inevitability of steep losses is, in his view, a pre-condition for building long-term wealth.

Stress-Test Your Portfolio for a 50% Drop – Here’s How

  • Calculate your real loss capacity. Take your total portfolio value and apply a 50% immediate decline. If that number – in absolute euro terms – would force you to sell, raid the account or drastically alter your life, your equity share is too high.
  • Use a simple rule of thumb to adjust. If you could stomach a 25% overall portfolio loss, for example, and you assume equities might halve, then holding around 50% in equities and 50% in safer assets gets you to that boundary. Scale up or down based on your own honest reaction to the 50% scenario.
  • Write down your plan now. Commit to a target asset mix and, critically, specify under what conditions you would not change it. A written statement reduces the chance of impulsive decisions during the next severe drop.