Earlier this month, President Donald Trump took a battering ram to the global economic order.
He announced that the U.S. would impose tariffs across the world. The proposed tariffs targeted every country that we trade with – and some that we don’t.
Investors knew that new tariffs were a possibility. It was a big reason why stocks sold off before the announcement.
But the actual plan was more sweeping and aggressive than anyone imagined… And although Trump has since announced a 90-day pause on most tariffs above his 10% baseline, folks are still uncertain about the future for the markets.
Stocks collapsed after the announcement. We saw a 10.5% decline over two days – one of the worst two-day stretches in history.
Panic has gripped investors. But according to history, this massive decline won’t last forever. It could even lead to a major rally.
Let me explain…
Markets hate uncertainty. And President Trump’s tariff announcement was easily the biggest uncertainty-creating event since the COVID-19 pandemic rocked the markets in early 2020.
The unknowns spiral out in every direction…
Will these tariffs actually hold once the 90-day pause ends, or are they just a bargaining chip? What happens if we pull them back for good? What does the global economy look like if we don’t? And with all of these possibilities… what the heck does it mean for the stock market?
With so many questions, it’s no wonder stocks crashed more than 10% after the announcement… pushing the S&P 500 Index near a one-year low. Take a look…
If you’ve been in the markets for a long time, you know corrections are normal. Stocks go up and down. It’s part of the deal with risky assets.
This Rare Stock Market Fall Points to Double-Digit Gains
Still, this kind of decline is far from normal. It’s actually incredibly rare.
To see it, I looked at every two-day decline of 10% or more since 1950. Over nearly 75 years, that kind of slide has only happened three other times. And surprisingly, all of those cases were fantastic times to buy. Take a look…
The obvious caveat is that our sample size is small. When a setup is this rare, it’s hard to draw strong conclusions. But the data we do have is clear…
Stocks have never crashed this much at the beginning of a major bust… They’ve always done it near a major bottom.
Our three instances were during the 1987 “Black Monday” crash… during the financial crisis in November 2008… and in March 2020. All three periods were generational buying opportunities. On average, stocks were up 33.4% a year later. And they soared 52.4% over the next two years.
This doesn’t mean we’ve definitely seen the bottom already. I expect we could see more pain, as there’s still plenty of uncertainty to shake the markets from here. But according to history, this kind of washout is a good sign for future returns.
Of course, you want to wait for the uptrend before buying. But once it starts, be ready to act. History says prices could absolutely soar.
Good investing,
Brett Eversole
To carry out Trump's Executive Order #14196 initiative, the administration will have to partner with a handful of U.S. companies that control the "reserve accounts" sitting on trillions of dollars' worth of untapped natural resources. I've spent months digging into this – and I've identified three companies that have already been granted "emergency status" and fast-track approvals. I believe their shares could skyrocket once new capital starts moving into the sector. See the three stocks that I expect to be the biggest winners as this plan rolls.
Source: Daily Wealth
