you think this is bad?

You think this is bad? During the Great Depression, share prices fell about 90%. At the lows, recounts historian Ron Chernow in "The House of Morgan," members of the Union League Club in New York wallpapered a room with stock certificates rendered almost worthless. A few years later, the market had recovered sufficiently that some members asked for the certificates back.

You think this is bad (Part II)? In the early 1970s the London stock market collapsed by about three quarters; a string of banks failed, and the financial crisis threatened the economy and political stability. At the lows, a leading financier told a London audience that their best "investments" would be cans of food, gold coins "and a gun." A few months later, the stock market began booming again and prosperity returned.

Stock-market panics were once so common that, according to 19th-century Wall Street manager Henry Clews, some investors living in the countryside grew very rich simply by waiting for the crashes and then scooping up stocks. These gentlemen, Mr. Clews recalled in his memoirs, only appeared in New York during a panic. They sold their stocks again at huge profits when the market had recovered, and then returned to their country estates to await the next crash. The nation prospered nonetheless.

Anyone with shattered nerves could do worse than spending $20 on Fred Schwed's hilarious investment classic "Where Are The Customers' Yachts?" It was written in 1940, and it's still right on the money. "When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them," he wrote. "Take the proceeds and buy conservative bonds." If shares keep rising, don't worry: Just wait for the market to crash. It will. When that happens, and "the panic … becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks." Hold them until the next boom. "Continue to repeat this operation as long as you live, and you'll have the pleasure of dying rich."

No, it's not quite as simple as that. But as Mr. Schwed knew, you're better off buying stocks when nobody wants them and their prices are cheap than when everybody wants them and the prices are dear.