Forward the Original Title‘Learning from History: A 50-Year Review of U.S. Stock Market Bear Markets and Key Takeaways’

TL;DR

Under Trump’s extreme trade policies, the Russell and Nasdaq have entered bear markets one after another; I have sorted out the reasons, declines, and bear-bull turning points for the U.S. stock market that has experienced every bear market (down more than 20% from its high point) in the past 50 years.

1. 1973-1974 Bear Market
   Time: January 1973 – October 1974
   Decline: approximately -48% (S&P 500)
   Reason:
   Oil crisis (first oil crisis, 1973 OPEC embargo)
   High inflation + stagflation
   Fed’s tightening of monetary policy, Nixon administration scandal (“Watergate”)
   Bear-Bull Turning Point: Oil prices stabilize, the Federal Reserve eases monetary policy, and President Ford takes office

2. 1980-1982 Bear Market
   Time: November 1980 – August 1982
   Decline: approximately -27%
   Reason:
   Chairman Paul Volcker raises interest rates aggressively to curb inflation, with federal funds rate rising to 20%
   Economy in deep recession
   High unemployment and declining corporate profits
   Bear-Bull Turning Point: The Fed begins to cut interest rates and inflation peaks (August 1982)

3. “Black Monday” 1987
   Time: August 1987 – December 1987
   Decline: approximately -34% (S&P 500)
   Reason:
   Automated programmatic trading (portfolio insurance)
   Technical selling triggered
   Rising interest rates and trade deficit concerns
   US dollar fluctuations are linked to global markets
   Bear-Bull Turning Point: The Federal Reserve quickly injected liquidity and intervened in the market again

4. 1990 Recession Bear Market
   Time: July 1990 – October 1990
   Decline: About -20%
   Reason:
   The first Gulf War triggered a surge in oil prices
   US enters mild recession
   Commercial real estate crisis + bank credit crunch
   Bear-Bull Turning Point: After the Gulf War broke out, market expectations turned optimistic (quick victory)

5. 2000-2002 Tech Bubble Burst
   Time: March 2000 – October 2002
   Decline: approximately -49% (S&P 500), Nasdaq exceeded -78%
   Reason:
   Internet technology stock valuation bubble bursts
   The 9/11 terrorist attacks in 2001 brought uncertainty
   Decline in corporate profits and crisis of confidence
   Bear-Bull Turning Point: Nasdaq valuation reset completed, Fed continues to cut interest rates

6. 2007-2009 Global Financial Crisis
   Time: October 2007 – March 2009
   Decline: approximately -57% (S&P 500)
   Reason:
   Real estate bubble burst
   Subprime mortgage crisis → Lehman Brothers bankruptcy
   Global credit freeze, banking crisis, Fed forced to bail out
   Bear-Bull Turning Point: the start of Fed QE1 + fiscal stimulus in March 2009

7. 2018 Bear Market
   Time: October 2018 – December 2018 (Trump’s first term)
   Decline: About -34%
   Reason:
   Trump escalated the Sino-US trade war, the Federal Reserve raised interest rates four times that year, and the White House and the Fed were conflicted
   Bear-Bull Turning Point: The Fed turns dovish in January 2019, pausing rate hikes and signaling more flexible policy

8. 2020 Epidemic Bear Market
   Time: February 2020 – March 2020 (the fastest bear market in history)
   Decline: About -34%
   Reason:
   COVID-19 outbreak triggers global economic lockdown
   Supply chain disruption + business shutdowns
   Panic selling + initial policy lag
   Bear-Bull Turning Point: The Federal Reserve’s Unlimited QE + Fiscal Relief Bill was introduced on March 23, 2020

9. Bear Market for Interest Rate Hike in 2022
   Time: January 2022 – October 2022
   Decline: S&P -27%
   Reason:
   High inflation (CPI as high as 9.1%)
   The Federal Reserve raised interest rates significantly (the benchmark interest rate rose from 0 to over 4.5%)
   Tech stock valuations compress, bond yields soar
   Bear-Bull Turning Point: CPI fell in October, the Fed hinted at slowing down the pace of interest rate hikes (Q4 2022), Silicon Valley Bank collapsed

Summarize:

1. This bear market shares similarities with the two bear markets during Trump’s presidency — all were “fast bears”, and both previous ones ended with a V-shaped rebound.
2. A turning point “event” is typically needed to mark the bottom of a bear market.

Response:

1. Avoid leverage during the left side of the decline.
2. Ensure your portfolio can withstand a 57% drop in the S&P 500 (which would be a further 40% from current levels) without triggering a margin call.
3. Stay calm during the early stages of the decline, buy gradually in batches, and stick to index funds only.
4. Prepare readily available capital to deploy on the right side of the curve (i.e., after signs of recovery).
5. On the right side, wait patiently for a turning point “event” and confirmation via technical signals before buying.

Important “events” or “signals”:

1. A possible delay by Trump in implementing additional retaliatory tariffs — 30% chance within the next week.

2. An official response from the EU regarding retaliatory tariffs — 50% chance within the next week, potentially aligning with the UK and Southeast Asia’s compromises.

3. Further escalation or easing of U.S.-China tariffs — expected between April 7–15. Trump’s interest in TikTok suggests negotiations are likely.

4. Buffett’s market moves — look for signals at the Berkshire Hathaway shareholder meeting on May 3.

5. The Federal Reserve’s stance on intervention — unlikely in the short term, but if conditions worsen, action is possible between May and June.

If negative events occur, continue to wait. If positive events unfold, consider increasing your positions.

The foundation of American strength — in technology, military power, and dollar dominance — cannot be undone by four years of Trump. Every major bear market conceals great opportunities. The key is to survive first, then wait patiently for the perfect moment to strike.

Disclaimer:

1. This article is reproduced from [X]. Forward the Original Title‘Learning from History: A 50-Year Review of U.S. Stock Market Bear Markets and Key Takeaways’. The copyright belongs to the original author [@LordWilliamUK]. If you have any objection to the reprint, please contact Gate Learn The team will handle it as soon as possible according to relevant procedures.
2. Disclaimer: The views and opinions expressed in this article represent only the author’s personal views and do not constitute any investment advice.
3. Other language versions of the article are translated by the Gate Learn team. The translated article may not be copied, distributed or plagiarized without mentioning Gate.io.