This article will cover history’s wildest moments, their triggers, who saw them coming, and how to thrive. Let’s equip you with funded accounts and smart strategies!
1929 Wall Street Crash: Stocks' Epic Plunge
The Dow dropped 90%, sparking the Great Depression.
- Triggers:
- Speculative bubble from easy credit and margin buying.
- Overvalued stocks amid overproduction and bank runs.
- Lack of regulations amplified panic.
- Who Saw It Coming:
- Roger Babson: Economist and statistician; warned on Sept. 5, 1929, of an impending crash and advised investors to sell stocks and pay off debts.
- Risk Management Tips:
- Diversify across assets to spread exposure.
- Use stop-loss orders as your safety net.
- Limit leverage (e.g., 1:10 max in vol spikes).
- Backtest strategies; maintain buffers for calls.
Pro fact: Led to SEC creation!
1973 Oil Crisis: Commodities' Shockwave
Oil quadrupled to $12/barrel; inflation and recessions followed.
- Triggers:
- OPEC embargo post-Yom Kippur War.
- US dollar devaluation exposed energy vulnerabilities.
- Speculation amid supply-demand imbalance.
- Who Saw It Coming:
- James E. Akins: US diplomat and ambassador to Saudi Arabia; predicted higher oil prices and potential crisis in his April 1973 Foreign Affairs article, warning of an “oil wolf” at the door.
- Risk Management Tips:
- Track news with economic calendars.
- Risk 1% max per trade in geo-flares.
- Diversify to non-correlates like gold.
Twist: Short equities? Discipline wins rebounds.
1980 Gold Bubble: Metals' Frenzy
Gold surged to $850/oz, then crashed amid inflation fears.
- Triggers:
- High US inflation (13%+); geopolitical tensions (Afghanistan, Iran).
- Safe-haven demand created a speculative bubble.
- Fed’s 20% rate hikes popped it.
- Who Saw It Coming:
- James Dines: Market analyst; warned of gold overvaluation in late 1979 and advised selling, profiting from the downturn through contrarian strategies.
- Risk Management Tips:
- Monitor RSI for overbought.
- Trail stops to secure gains.
- Fade extremes with small positions.
- Blend gold with forex for hedging.
Update: Gold at $3,486 equivalent in 2025 terms, leverage it prop-style!
2008 Global Financial Crisis: Multi-Asset Meltdown
2020 COVID-19 Crash: Pandemic Chao
S&P down 57%; forex/commodities swung wildly.
- Triggers:
- Subprime defaults and toxic derivatives.
- Over-leveraged banks; low rates fueled excess.
- Global links spread the contagion.
- Who Saw It Coming:
- Michael Burry: Hedge fund manager (famous from “The Big Short”); predicted housing bubble burst, shorted subprime mortgages, and profited over $700M.
- Ray Dalio: Bridgewater founder; foresaw debt crisis, positioned his fund defensively, and navigated the crash successfully.
- Risk Management Tips:
- Cut leverage in high-vol; avoid correlated bets.
- Journal trades
- Utilize our tools.
Note: Bitcoin born here
Stocks fell 34%; oil went negative; gold surged.
- Triggers:
- Lockdowns halted economies; supply chains broke.
- Unemployment spikes and uncertainty.
- Oil price war amid demand plunge.
- Who Saw It Coming:
- Bill Ackman: Pershing Square CEO; warned in Feb. 2020 of “hell is coming” due to virus spread, bought credit default swaps, and turned $27M into $2.6B profit.
- Risk Management Tips:
- Watch Fear & Greed Index.
- Set drawdown limits
- Prep via webinars; scale in recoveries.
Eye-opener: Fast rebounds reward patience.
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