Original Author: Lord William (X: @LordWilliamUK）
Under Trump's extreme trade policy, Russell and Nasdaq successively entered bear markets;
I have sorted out the reasons, declines, and bull-bear turning points of US stocks during bear markets (falling more than 20% from the peak) over the past 50 years.
1973-1974 Bear Market
Time: January 1973 - October 1974
Decline: Approximately -48% (S&P 500)
Reasons:
Oil Crisis (First Oil Crisis, OPEC Embargo in 1973)
High Inflation + Stagflation
Federal Reserve's Tight Monetary Policy
Nixon Government Scandal ("Watergate")
Bull-Bear Turning Point:
Oil Price Stabilization, Fed's Monetary Easing, Ford's Presidency
1980-1982 Bear Market
Time: November 1980 - August 1982
Decline: Approximately -27%
Reasons:
Paul Volcker's Aggressive Rate Hikes to Curb Inflation, Federal Funds Rate Rises to 20%
Economy Enters Deep Recession
High Unemployment and Declining Corporate Profits
Bull-Bear Turning Point:
Fed Begins to Cut Rates, Inflation Peaks (August 1982)
"Black Monday" in 1987
Time: August 1987 - December 1987
Decline: Approximately -34% (S&P 500)
Reasons:
Technical Sell-off Triggered by Automated Programmatic Trading (Portfolio Insurance)
Rising Interest Rates and Trade Deficit Concerns
US Dollar Fluctuations and Global Market Linkage
Bull-Bear Turning Point:
Fed Quickly Injects Liquidity, Intervenes in Market Again
1990 Recession Bear Market
Time: July 1990 - October 1990
Decline: Approximately -20%
Reasons:
First Gulf War Triggers Oil Price Surge
US Enters Mild Recession
Commercial Real Estate Crisis + Bank Credit Tightening
Bull-Bear Turning Point:
Market Expectations Turn Optimistic After Gulf War Outbreak (Quick Victory)
2000-2002 Tech Bubble Burst
Time: March 2000 - October 2002
Decline: Approximately -49% (S&P 500), Nasdaq Over -78%
Reasons:
Internet Tech Stock Valuation Bubble Burst
9/11 Terrorist Attacks Bring Uncertainty
Corporate Profit Decline, Confidence Crisis
Bull-Bear Turning Point:
Nasdaq Valuation Reset Completed, Fed Continues Rate Cuts
2007-2009 Global Financial Crisis
Time: October 2007 - March 2009
Decline: Approximately -57% (S&P 500)
Reasons:
Real Estate Bubble Burst
Subprime Crisis → Lehman Brothers Bankruptcy
Global Credit Freeze, Banking Crisis, Fed Forced to Rescue
Bull-Bear Turning Point:
Fed Launches QE 1 + Fiscal Stimulus in March 2009
2018 Bear Market
Time: October 2018 - December 2018 (First Trump Term)
Decline: Approximately -34%
Reasons:
Trump Escalates US-China Trade War, Fed Raises Rates Four Times, White House-Fed Conflict
Bull-Bear Turning Point:
Fed Turns Dovish in January 2019, Pauses Rate Hikes and Hints at More Flexible Policy
2020 Pandemic Bear Market
Time: February 2020 - March 2020 (Fastest Bear Market in History)
Decline: Approximately -34%
Reasons:
COVID-19 Pandemic Triggers Global Economic Lockdown
Supply Chain Disruption + Business Shutdown
Panic Selling + Initial Policy Lag
Bull-Bear Turning Point:
Fed Launches Unlimited QE + Fiscal Rescue Act on March 23, 2020
2022 Rate Hike Bear Market
Time: January 2022 - October 2022
Decline: S&P Approximately -27%
Reasons:
High Inflation (CPI Reaches 9.1%)
Fed Significantly Raises Rates (Benchmark Rate Rises from 0 to Over 4.5%)
Tech Stock Valuation Compression, Bond Yield Surge
Bull-Bear Turning Point:
CPI Declines in October, Fed Hints at Slowing Rate Hike Pace (Q4 2022), Silicon Valley Bank Collapse
Summary
1. This bear market and the two bear markets during Trump's term have similarities, both being quick bear markets, with V-shaped recoveries after the last two bear markets;
2. Bear market bottoming requires a "turning point" event.
Strategies
1. No leverage during downward trend;
2. Ensure no margin call even if S&P drops 57% (another 40% drop from current level);
3. Don't get emotional during downward trend, buy in batches, only buy index funds;
4. Prepare callable funds for bottom-fishing;
5. Right-side buying requires patience to wait for turning point "events" and technical patterns.
Important "Events" or "Signals"
1. Possibility of Trump delaying additional reciprocal tariffs - within next week, 30% probability;
2. EU's formal response on reciprocal tariffs - within next week, 50% probability of following UK and Southeast Asia's compromise;
3. Further escalation or easing of US-China tariffs - between April 7-15, Trump's desire for TIKTOK suggests negotiations;
4. Buffett's market entry timing - May 3, Omaha Shareholders Meeting should provide signals;
5. Fed's rescue attitude - unlikely short-term, possible between May-June if situation continues to deteriorate;
If negative "events" occur, continue waiting; if positive "events" occur, can add positions!
Finally,
The foundation of US technology, military, and dollar hegemony cannot be ruined by Trump in 4 years,
Big bear markets breed big opportunities, survive first, patiently wait for a full-force strike!
