Every past episode the series analyses, oldest first. Each one links back to the chapter that works through it.
Show the numbers
| Group | Cases |
|---|---|
| 1720s | 1 |
| 1920s | 3 |
| 1940s | 1 |
| 1950s | 1 |
| 1960s | 2 |
| 1970s | 6 |
| 1980s | 9 |
| 1990s | 9 |
| 2000s | 19 |
| 2010s | 7 |
| 2020s | 18 |
1720 The South Sea bubble
The South Sea Company's stock rose from about £130 at the start of 1720 to about £1,000 in late June, 7.7 times, then fell to about £200 by December, a drop of −80.0 %.
1929 The Great Contraction
From a peak in August 1929 to a trough in March 1933, the NBER counts a contraction of 43 months. The Dow Jones Industrial Average fell from 381.17 on 3 September 1929 to 41.22 on 8 July 1932, a loss of −89 % (S&P Dow Jones Indices).
1929 The Dow peaks at 381 before an 89 % fall
The Dow Jones Industrial Average closed at 381.17 on 3 September 1929. By 8 July 1932 it had fallen to 41.22, a loss of −89.2 %. To get back to the peak from the low, the index needed a gain of +825 %, and it did not close above 381 again until November 1954.
1929 The Dow peaks and loses most of its value
The Dow Jones Industrial Average closed at 381.17 on 3 September 1929 and at 41.22 on 8 July 1932, a fall of −89.2 %.
1946 Inflation took about 15 % of a saver's cash
In 1946, as wartime price controls ended, consumer prices rose about 18.1 % (BLS) while 30-day Treasury bills paid about 0.35 % (SBBI). A saver in bills lost about −15.0 % of buying power in one year.
1952 Markowitz publishes Portfolio Selection
Harry Markowitz's paper in the Journal of Finance in March 1952 gave the mean-variance model: judge each investment by what it adds to the risk and return of the whole. He shared the 1990 Nobel prize in economics for it with Merton Miller and William Sharpe.
1963 Capital Gains Research Bureau and the adviser's duty
On 9 December 1963 the Supreme Court decided SEC v. Capital Gains Research Bureau. A newsletter publisher had bought shares, recommended them to subscribers, and sold into the rise its own advice caused, a practice called scalping.
1964 Sharpe publishes the capital asset pricing model
William Sharpe's 1964 paper in the Journal of Finance derived the security market line; John Lintner (1965) and Jan Mossin (1966) reached the same model on their own.
1973 The Arab oil embargo
From October 1973 to March 1974, Arab members of OPEC cut exports and embargoed shipments to the United States and some other countries. The price of crude roughly quadrupled over a few months (US Energy Information Administration).
1973 Oil shock and stagflation
A recession from November 1973 to March 1975 followed the oil embargo of October 1973. It lasted 16 months, and unemployment reached 9.0 % in May 1975 while consumer prices were 9.5 % higher than a year earlier (BLS via FRED).
1973 Listed options and Black–Scholes
The Chicago Board Options Exchange opened on 26 April 1973, the first exchange to list standard options on shares.
1974 Stocks and inflation hit savers in the same two years
From 11 January 1973 to 3 October 1974 the S&P 500 price index fell from 120.24 to 62.28, a drop of −48.2 % (S&P Dow Jones Indices). In the same two years consumer prices rose 22.1 %.
1974 Treasury bills lose to inflation
In 1974 the three-month Treasury bill yield averaged 7.8 % while consumer prices rose 12.3 % from December 1973 to December 1974 (FRED series TB3MS and CPIAUCNS). A saver rolling bills that year ended with −4.0 % in buying power.
1979 The Federal Reserve turns against inflation
Paul Volcker became chair of the Federal Reserve in August 1979, and on 6 October 1979 the Fed announced it would target the supply of bank reserves and let the funds rate move.
1980 Gold at $850, then a 28-year wait
The LBMA gold price reached $850 an ounce on 21 January 1980, after a decade of high inflation, the Iranian revolution and the Soviet invasion of Afghanistan. Gold did not pass that level again in nominal terms until January 2008.
1980 Gold peaked at about 850 dollars
On 21 Jan 1980 the London gold price reached about $850 an ounce (LBMA), after a decade of high inflation and negative real rates. Gold did not regain that nominal price until January 2008.
1981 The Volcker double dip
Two recessions came close together: January to July 1980, 6 months, and July 1981 to November 1982, 16 months. The effective federal funds rate averaged 19.10 % in June 1981, and unemployment reached 10.8 % in November 1982 (Federal Reserve and BLS via FRED).
1981 Ten-year Treasury yields peak at 15.84 %
On 30 September 1981 the 10-year Treasury yield closed at 15.84 %, the highest value in FRED's daily series, as the Federal Reserve under Paul Volcker held policy tight to break inflation.
1985 The Plaza Accord
On 22 September 1985 the finance ministers and central bank governors of the United States, Japan, West Germany, France and the United Kingdom met at the Plaza Hotel in New York and agreed to push the dollar down after a long climb.
1987 A day the normal curve could not explain
On 19 October 1987 the S&P 500 fell 20.5 % in one session. Chapter 3 compares that fall with the size of a normal day and shows why a bell curve called it next to impossible.
1987 Black Monday, the 20-sigma day
On 19 October 1987 the S&P 500 fell 20.5 % in a single session, its largest one-day fall (S&P Dow Jones Indices). Daily moves before it had a standard deviation of roughly 1 %, so on a normal curve this was a move of about twenty standard deviations.
1987 Black Monday
On 19 October 1987 the S&P 500 fell 20.5 % in one day. In January 1988 the Presidential Task Force on Market Mechanisms (the Brady Commission) reported that portfolio insurance programmes were among the heaviest sellers of index futures that day.
1989 The Nikkei peaks at 38,915.87
On 29 December 1989 the Nikkei 225 closed at 38,915.87. Japan was then the largest stock market in the MSCI world index, at about 45 % of it by some measures. On 10 March 2009 the Nikkei closed at 7,054.98, a fall of −81.9 %.
1992 Sterling leaves the ERM
On 16 September 1992 the United Kingdom raised its base rate from 10 % to 12 % and announced a rise to 15 %, then suspended its membership of the European Exchange Rate Mechanism that evening. Sterling had joined in October 1990 at a central rate of 2.95 Deutsche marks.
1994 A year of surprise rate rises
On 4 February 1994 the Federal Reserve raised the funds rate target for the first time in five years, and took it from 3 % to 6 % by 1 February 1995, an increase of +300 bp.
1994 The Fed starts hiking and bonds lose a year of income
The Federal Reserve raised its target rate on 4 February 1994, its first hike in five years, and kept going until it reached 6 % on 1 February 1995, double the 3 % where it started.
1997 Thailand floats the baht and the Asian crisis begins
On 2 July 1997 Thailand stopped defending the baht's link to the dollar and let it float. Having traded near 25 per dollar, the baht fell past 50 per dollar by January 1998. Within months the crisis spread to Indonesia, Malaysia, the Philippines and South Korea.
1997 Thailand floats the baht
On 2 July 1997 Thailand gave up the baht's link to a dollar-dominated basket, at about 25 baht to the dollar, after months of speculative attacks had drained its reserves. The fall spread across Asia within weeks.
1997 Thailand floated the baht
On 2 Jul 1997 Thailand gave up the baht's link to the dollar. The currency, held near 25 baht per dollar before the float, traded at more than 50 per dollar by January 1998, and the crisis spread across East Asia.
1998 Long-Term Capital Management's bets move together
After Russia's default and devaluation on 17 August 1998, many spread trades that had moved independently started to lose at the same time.
1998 LTCM is recapitalised
On 23 September 1998, with the Federal Reserve Bank of New York brokering talks, a group of fourteen banks and brokers put about $3.6 billion into Long-Term Capital Management, a hedge fund whose losses after Russia's default of August 1998 threatened its lenders and counterparties.
1999 The Bank of Japan sets its policy rate near zero
In February 1999 the Bank of Japan cut its overnight rate to about zero, and short rates stayed close to zero for most of the next quarter century. It moved the rate below zero in early 2016 and ended negative rates in March 2024.
2000 The Nasdaq peaks at 5,048 and loses 78 %
The Nasdaq Composite closed at 5,048.62 on 10 March 2000. On 9 October 2002 it closed at 1,114.11, a fall of −77.9 %. Getting back needed +353 %, and the index did not close above its 2000 peak until 2015.
2000 The Nasdaq peaks on internet stocks
The Nasdaq Composite closed at 5,048.62 on 10 March 2000 and at 1,114.11 on 9 October 2002, a fall of −77.9 %.
2001 The dot-com recession
The NBER dates a contraction from March to November 2001, 8 months. The S&P 500 had peaked a year earlier, on 24 March 2000, and fell −49 % by its low on 9 October 2002 (S&P Dow Jones Indices).
2003 Qualified dividends get the capital gains rate
In May 2003 the Jobs and Growth Tax Relief Reconciliation Act cut the top federal rate on qualified dividends to 15 %. Before it, dividends faced ordinary rates, which topped out at 38.6 % in 2002.
2006 US house prices peak
US house prices reached their peak around 2006, after a decade in which lending standards loosened and many buyers expected prices never to fall nationally. The fall that followed fed the mortgage losses behind the 2008 crisis.
2007 BNP Paribas freezes three funds
On 9 August 2007 BNP Paribas suspended withdrawals from three investment funds, saying it could no longer value their US subprime holdings. Money markets seized up the same day, and the European Central Bank lent banks overnight funds in large amounts.
2008 The S&P 500 loses 37 % in a calendar year
The S&P 500 returned about −37 % in 2008, dividends included, and fell −56.8 % from its close of 1,565.15 on 9 October 2007 to 676.53 on 9 March 2009 (S&P Dow Jones Indices). We set those losses against what a normal curve with SBBI's long-run figures would have expected.
2008 Stock markets fall together
In the autumn of 2008, after Lehman Brothers filed for bankruptcy on 15 September, stock markets around the world fell together. Investors who had spread their money across countries found the spreading helped far less than the calm years had suggested.
2008 The Great Recession
The NBER dates a peak in December 2007 and a trough in June 2009, 18 months, the longest since the war. The S&P 500 fell −57 % from October 2007 to March 2009, and unemployment reached 10.0 % in October 2009.
2008 The Federal Reserve cuts to zero and starts buying bonds
In December 2008 the Federal Reserve cut its target to a range of 0 to 0.25 %, and the effective rate averaged 0.16 % that month. It then bought Treasuries and mortgage securities in several rounds of quantitative easing.
2008 High-yield spreads reach about 2,000 basis points
After Lehman Brothers failed on 15 September 2008, credit markets froze. By December 2008 the option-adjusted spread on the ICE BofA US High Yield index had reached about 2,000 bp, the widest in the index's history.
2008 Emerging-market stocks lose more than half in dollars
The MSCI Emerging Markets index lost about 53 % in US dollars in calendar 2008, against about 37 % for the S&P 500 with dividends (MSCI and S&P Dow Jones Indices).
2008 Equity REITs lose more than a third
In 2008 the FTSE Nareit All Equity REITs index returned −37.7 % (Nareit). Its fall from the peak in early 2007 to the trough in March 2009 was much deeper (Gaps).
2008 Oil above $145, then near $30
West Texas Intermediate crude rose above $145 a barrel in July 2008 and fell to about $30 by late December 2008 (EIA, FRED series DCOILWTICO).
2008 Lehman fails; the Fed lends to AIG
Lehman Brothers filed for bankruptcy on 15 September 2008. The next day, 16 September 2008, the Federal Reserve authorised a loan of up to $85 billion to American International Group, whose financial products unit had sold CDS protection on super-senior CDO tranches.
2008 Rebalancing into the crash
The S&P 500 returned −37.0 % in 2008 and the Bloomberg US Aggregate 5.2 %; in 2009 they returned 26.5 % and 5.9 %. A $100 60/40 mix fell to $79.90 by the end of 2008, with stocks now 47.3 % of it.
2008 Madoff's fraud and the custody rule
The FBI arrested Bernard Madoff on 11 December 2008, a day after he told his sons his investment business was a Ponzi scheme. Final client statements showed about $65 billion in fictitious balances.
2009 Stocks bottom at a CAPE of 13
In March 2009 the S&P Composite's CAPE fell to 13.3, its lowest since the mid-1980s, an earnings yield of 7.5 %. The ten years that followed returned +14.3 % a year after inflation, among the best decades in the data.
2009 A lost decade for US stocks
Over the ten years 2000 to 2009 the S&P 500 returned −9.1 % in total with dividends (−0.95 % a year), so $100 became $90.88. The Bloomberg US Aggregate returned 84.8 % over the same years (6.33 % a year).
2013 Detroit files the largest US municipal bankruptcy
On 18 July 2013 the City of Detroit filed for bankruptcy under Chapter 9 of the US Bankruptcy Code, with about $18 billion of debts and other obligations, the largest municipal filing in US history at the time.
2014 OPEC declines to cut output
On 27 November 2014 OPEC chose to keep its production target unchanged in the face of rising US shale output. Brent crude, already falling, dropped from $115.19 a barrel on 19 June 2014 to $45.13 on 13 January 2015, a fall of −61 % (EIA via FRED).
2015 The Swiss National Bank drops its floor
On 15 January 2015 the Swiss National Bank ended the minimum rate of 1.20 francs per euro that it had defended since September 2011. EUR/CHF traded below 0.90 within minutes before recovering part of the move.
2016 Puerto Rico defaults on its general obligation bonds
On 30 June 2016 the US Congress passed PROMESA, a law that created an oversight board for Puerto Rico and a court process for its debts, and on 1 July 2016 Puerto Rico missed payments on its general obligation bonds.
2017 The Tax Cuts and Jobs Act cuts the corporate rate to 21 %
Signed on 22 December 2017, the Tax Cuts and Jobs Act cut the federal corporate rate from 35 % to 21 % from 2018, lowered most individual brackets, with a top rate of 37 % in place of 39.6 %, capped the deduction for state and local taxes at $10,000, and nearly doubled the standard deduction.
2018 The short-volatility products collapse
On 5 February 2018 the VIX closed at 37.32, up from 17.31 the previous trading day. An exchange-traded note called XIV, which paid the inverse of the daily return on short-dated VIX futures, lost about 96 % of its value after the close and was later terminated by its issuer.
2018 The Fifth Circuit vacates the Labor Department's fiduciary rule
In March 2018 the Fifth Circuit Court of Appeals vacated the Department of Labor's 2016 fiduciary rule in a case brought by business groups, holding that the Department had gone beyond its authority.
2020 WTI crude settles at minus $37.63
On 20 April 2020 the May futures contract for West Texas Intermediate crude settled at −$37.63 a barrel on the New York Mercantile Exchange (CME Group). Lockdowns had cut fuel demand, and storage at Cushing, Oklahoma, the contract's delivery point, was close to full.
2020 The shortest recession
A peak in February 2020 and a trough in April 2020 make a recession of 2 months. Unemployment jumped from 3.5 % to 14.8 % in two months (BLS via FRED), and the S&P 500 fell −34 % from 19 February to 23 March 2020.
2020 The dash for cash in the Treasury market
As the pandemic shut economies in March 2020, investors sold whatever they could turn into cash, including Treasuries. The 10-year yield fell to 0.54 % on 9 March 2020 and then rose to 1.18 % by 18 March, a move of +64 bp in nine days, while stocks were also falling.
2020 Spreads jump and the Fed steps into corporate credit
In March 2020 the high-yield spread rose to about 1,100 bp as the pandemic shut down large parts of the economy.
2020 The value factor ends a 14-year losing run
From its peak in December 2006 to September 2020 the Fama and French value factor, HML, lost −57.8 % of its value, the deepest drawdown in its history back to 1926. It then rose +22.2 % in 2021 and +31.7 % in 2022 (Kenneth French Data Library).
2020 Remote work starts a slump in office buildings
From 2020, many office workers began working from home some or all of the week. Office vacancy rates in large US cities rose for several years, and office property values fell further than those of any other major property type (Gaps).
2020 WTI settles at minus $37.63
On 20 April 2020 the May 2020 WTI futures contract settled at −$37.63 a barrel on CME's NYMEX, the day before it expired. Lockdowns had cut fuel demand so fast that storage at Cushing, Oklahoma, the contract's delivery point, was close to full.
2020 The VIX closes at 82.69
On 16 March 2020, as the pandemic closed economies, the VIX closed at 82.69 (Cboe), its highest close on record, above the peak of November 2008.
2020 Oil futures settled below zero
On 20 Apr 2020 the May contract for WTI crude oil settled at −$37.63 a barrel (CME, EIA), as demand collapsed in the pandemic and storage near the delivery point in Cushing, Oklahoma, ran short.
2021 GameStop and the meme-stock rally
GameStop closed at $18.84 on 31 December 2020 and at $347.51 on 27 January 2021 (prices before the 2022 split), 18.4 times in under a month, as online forums coordinated buying and short sellers covered.
2022 The fastest rate rises in four decades
From 16 March 2022 to 14 December 2022 the Federal Reserve raised the top of its target range from 0.25 % to 4.50 %, +425 bp, after consumer prices rose 9.1 % in the year to June 2022 (BLS via FRED).
2022 Rates jump and the bond index loses about 13 %
The Federal Reserve raised its target from 0 to 0.25 % on 16 March 2022 to 4.25 to 4.50 % on 14 December 2022. The 10-year yield went from 1.52 % at the end of 2021 to 3.88 % at the end of 2022, a rise of +236 bp (FRED DGS10).
2022 Rising rates hit listed property
The FTSE Nareit All Equity REITs index returned −24.9 % in 2022 (Nareit), while the 10-year Treasury yield rose from 1.52 % to 3.88 % (FRED DGS10).
2022 The Bank of England buys long gilts
On 28 September 2022 the Bank of England announced temporary purchases of long-dated government bonds (gilts) after yields jumped following the government's fiscal statement of 23 September.
2022 Stocks and bonds fell together
In 2022 the S&P 500 returned −18.1 % with dividends (S&P Dow Jones Indices) and the Bloomberg US Aggregate bond index −13.0 % (Bloomberg). A 60/40 mix of the two, rebalanced in January, lost −16.1 %, one of its worst years since the 1930s.
2022 TIPS lost money in the year of highest inflation
In 2022 the 10-year TIPS real yield rose from about −1.0 % at the end of 2021 to about 1.5 % at the end of 2022 (FRED, series DFII10), while CPI rose 6.5 % from December to December (BLS). Bloomberg's US TIPS index lost about −12.0 % for the year.
2022 REITs fell as rates rose
From the first hike on 16 Mar 2022 to the 4.25 to 4.50 % target set on 14 Dec 2022, the Fed raised its rate by 425 basis points, and the 10-year Treasury yield went from 1.51 % to 3.88 % over the calendar year (FRED, series DGS10).
2022 SECURE 2.0 moves the RMD age to 73, then 75
Signed in December 2022 as part of a year-end spending law, the SECURE 2.0 Act raised the starting age for required minimum distributions from 72 to 73 from 2023 and to 75 from 2033, cut the penalty for a missed distribution, ended RMDs for Roth 401(k) accounts from 2024, and allowed limited roll...
Educational only. Not investment, tax, or legal advice, and not an offer of advisory services. InnovationStrat Wealth, LLC is not yet registered as an investment adviser.