#225 - Stock Market History Is Repeating Itself

History doesn't repeat, but it rhymes. The longer the bull market goes for, the worse the crash is. If you're not totally leveraged and you've got multiple income streams, you're prepared for the worst. Worst thing you can do is panic to the point where you sell at the bottom. I'm Lloyd James Ross, seven-figure investor and entrepreneur, and I've helped thousands of business owners and

professionals turn financial stress into success. If you're stuck in old money habits, overwhelmed by investing, or unsure where to start, This is for you. I'll give you the mindset and strategies to take control, grow your wealth, and achieve financial freedom. It's time to make your money work for you. Stock markets are crashing! Again, headlines are screaming, panic's rising! Or is it? What you may not realize is we didn't go through a stock market crash

in the last few weeks of March 2025. We've actually just gone through a correction. Either which way, most people are making the same mistake they always do. They react emotionally. But here's the truth, this isn't new. So in this episode, I'm gonna show you what most people are missing and why history might just be repeating itself in the worst or best way possible. So let's get into it. This is all about stock market crashes. And so what people don't realize is

that it does happen quite a bit. But before we jump into the episode, I want to explain a couple of things to you. There are three types of market collapses that happen. The very first one is called a correction. And that's when the market falls by about 10%. The next one where the market falls by 20% is called a bear market. Why do they call it a bear market? Because the bear swipes his hand downwards as

he attacks. And that's why they call it a bear market. The reason they call it a bull market when the market goes up by 20% is because as the bull attacks, its horns go upwards. That's why there's a bull on Wall Street. So that's where you get bear market and bull market from. So it's got to move 20% to be a bear market down, 20% up to be a bull market. But then of course, there is a crash. And a crash is when the market falls by 30% or

more. And believe it or not, that has happened quite a bit. So in this episode, I'm going to go through a market history and show you and explain to you when the market has collapsed by 30% or more and the reasons behind it so that you

can see it coming maybe in the future. But most importantly, you can actually leverage it and use it to your advantage. Let's go back to the most recent one. Before we dive into the big, big, big ones, let's go back to the most recent. In fact, let's go right back in time to 1987. In 1987, there was a flash crash and they called it Black Monday. And it's where the stock market collapsed by, geez, I think the

Dow fell by about 20% in a single day. And it's where all the stockbrokers were actually jumping off buildings, because there was a lot of leverage in the market, and there was a flash crash. Now, it wasn't a long, drawn-out crash, but the market fell by a lot in 1987, and more than it had before. And it really came after a big, long

bull market. And so it took everyone by surprise. And so that was a fairly famous crash in the stock market, but it was nothing compared to what was going to happen in the year 2000 because after the crash of 1987 The world entered one of the greatest bull markets in history, and it was the roaring 90s. And in this period of time, the likes of the Wolf of Wall Street was in full flight, okay? So this is where everyone was making money, hand over fist, and

yeah, greatest bull market run ever. In fact, I don't think they had a stock market correction or any backwards movement for a year for like almost 10 straight years. So it was like, make money, make money, make money. And the longer the bull market goes for, the worse the crash is. So in the year 2000, 1999, 2000, one of the greatest crashes ever happened. And it's been coined

the dot-com bubble. And here's how it happened. So on the back of the 90s bull run, a lot of tech companies were starting to come into fruition. And tech companies were developed because this new incredible technology was invented called the internet. And so it took the world by storm, right? flipping the way that we communicate is a little bit like what AI is doing right now. It's completely transforming the world. It's like it moved us from the industrial age

into the information age. And so all these new companies were popping up. Like, where are the internet? Where are the toy store on the internet? Where are pets.com on the internet? Like, all these businesses were moving to the internet. And of course, some wonderful companies were created back then, like Amazon and some other awesome online businesses at the time. that were legitimate businesses. But the reality is a lot of them were illegitimate businesses, meaning they were businesses

that weren't actually earning any money. So back then, what you could do is you could get a URL, you could call yourself this business, you say you're a tech company, and boom, you have all this backing, all this capital would go to you, you could go and list on the stock exchange, and all of a sudden, everyone will pour their money into your business. But unfortunately, It wasn't making any money.

So eventually after this hype, right, zero fundamentals, zero reasons to own these businesses, but they were doing it because they didn't want to miss out. And he was even pulling in some of the pros, right? So almost no one escaped this except for the likes of my hero Warren Buffett that told everyone at a Sun Valley event that this was very much like cars back in the year 1920. It's new technology, like the railroads, like Chula Bolt, like he'd

seen this before. This wasn't new. So he said to everyone, we're sitting out of this one. And of course, everyone thought he'd lost his mind because if you don't get in, you miss out, you don't know what you're doing. And all the headlines would say, Warren Buffett's lost the plot. And so then eventually what happened was this, people discovered that they weren't earning any money. And eventually, everyone started to sell. And they sold them.

And no one wanted to hold the hot potato. So everyone was like, I don't want to, I don't want to. And the whole market in the year 2000 absolutely collapsed, falling more than 30% very quickly. It was one of the sharpest, worst declines in stock market history. In fact, it was so bad that a lot of those, the stock market and the NASDAQ, where all those tech companies live on the stock exchange, the NASDAQ, It didn't recover its peak dot-com

bubble hype for like 14 years. So if you had a board at the peak of the market, you had to wait 14 years to get back to where you were. So it was very bad. It was a massive crash. A lot of people lost a lot of money. In fact, in those days, you could buy Amazon for $6 a share. So some of

the best businesses got thrown out with the baby got thrown out with the bathwater. But without a doubt, it taught us so many financial lessons, like just because there's a new technology in town, doesn't mean that those things are worth anything. And it's very similar to what's happening in crypto. It's very similar to what's happening in AI. Just because the technology is cool, does not make the thing that you're buying cool or

effective. So there's a word of warning. And this has happened before. All right. So again, happened with railroads, happened with cars, happened with Internet, happening with crypto, happening with AI,

it's gonna happen forever, right? So just be careful of that. Now, what is the crash that came after the dot-com bubble and after the 1987 crash? Well, if we look forward, what happened from that point on was the market corrected and things were going fairly well again. So in the early 2000s, the dot-com bubble had collapsed. A lot of the tech companies got hammered, but a lot of other businesses like banks and traditional businesses kept doing

well. But what happened was this. everyone thought that the property market could never go backwards. And so a simple idea is that land over time appreciates and property grows steadily over time. And that was a wonderful, simple concept that didn't get taken for granted, didn't get pushed to the didn't push the envelope on it. It was just the steady flow of things. But then what happened was someone realized, oh, probably doesn't go

backwards. Why don't we just leverage up and start buying more properties than we could possibly afford because we're going to get loans from the banks and they're going to lend us the money to buy all these properties. Now, here's the thing. At the same time, The banks were actually lending money to these people to buy property because they also thought the property didn't go backwards or down. And they were lending them to people with no jobs and

no income. They called them ninja loans. And if you ever watched the movie The Big Short, they talk about these things called the ninja loans. And so these brokers from the banks, in fact, the Wolf of Wall Street was also doing it at the same time. He was selling mortgages then as well. They

were selling these mortgages to people that really couldn't afford it. And if you watch the movie, they were actually selling like five properties to strippers who actually didn't have the cash flow to fund any of those property investments if interest rates went back up. So there was a couple of things happening at once. One, people thought property never went backwards. Two, banks

were lending to people that shouldn't have been borrowing money. And three, they were borrowing the money on these things called teaser rates, like low interest rates. And at a certain time, the teaser rates would go up and interest rates would go up. Because they had no jobs, no income, they were going to default on all these mortgages. But to make matters worse is where it got really bad. The banks took those mortgages, bundled them together into what's called a mortgage bond. And

they then packaged the crappy mortgages with the good mortgages. Then the ratings agencies like Moody's and S&P they rated these crappy mortgage bonds with like good ones and crappy

ones in it, right? They've rated them triple-a. So everyone in the financial industry thought that these things were actually good Right, and so they basically as the old saying goes they polish deterred and then they saw then what happened was they actually took these mortgage bonds that everyone thought were great and And they then sold them in big portions to countries

like Iceland. So these countries are buying these massive mortgage bonds and are leveraging up to buy more of them because they knew that property wouldn't go backwards and mortgages are the safest things ever. And these were rated as AAA. And of course, eventually, the world found out that there was a massive fraud going on. The banks were lending to the wrong people. The rating agencies were rating them wrong. And people were buying

on leverage at the same time, these crappy mortgages. And of course, when that was found out, The whole world pretty much collapsed. The banks created the greatest financial catastrophe since the 1929 stock market collapse and the Great Depression. We were, in fact, on the

verge of a Great Depression. It was so bad that large banks like Lehman Brothers were going bankrupt. Bear Stearns almost went bankrupt. JPMorgan bought Bear Stearns, Lim Brothers was gone, collapsed, bankrupt. Can you imagine this? The United States banks were going broke. So the bank run started to happen. People started to freak out and panic. So they should have, because this

is really bad. And there was all this leverage in the market. And until Hank Paulson stepped in and changed that, he was the head of the US Federal Reserve at the time, and he had to come in and say, hey, we need to loosen up the money and provide credit to the marketplace. And if he hadn't done that, we would literally have gone through a Great Depression. The world doesn't even understand how bad it was. But it was really bad. It was actually one of the greatest crashes ever.

And what happened was it affected property prices. And this is why even today, people are like, property only goes up. Yeah, right. Go back. You weren't even born. If you were like 35 and younger, you have no idea what you're talking about unless you've read financial history. You just don't. I was 23 when the 2008 financial collapse happened. I actually watched the TV as all these banks collapsed before our very eyes. And my dad said to me, we'll be lucky

to keep our house. And he was right. Everyone's houses went back by 50%. They were buying off-the-plan mortgages here, our homes here, fell by 50%. I saw people walk away from their deposits. I saw builders, developers in business for 40 years go broke here, let alone all around the world. So property doesn't always go up, just so you know. Banks got greedy back then. It was bad. But thankfully, there was enough credit supply by the US government to

maintain a level of order in the banking and financial industry. So sadly, the taxpayer bowed out the banks. That sucks. There's a lot of regulation. But at the end of the day, it was a massive crash. It collapsed by up to 40%. But what was really cool about

that is that there was incredible deals at the time. Like Warren Buffett took $5 billion of Berkshire Hathaway's money and he actually lent it to Bank of America to give them liquidity and he got a 9% return on that and then he turned it into, they're called convertible notes, he turned it into shares in the bank and he 7X'd it. He 7X'd 5 billion. There was so many cool deals. You could have picked up like cents on the dollar back then and the only thing

that I hate was I had no money because I was just starting my career. And I made this promise to myself, I'm like, Oh my God, I wish I had like a million bucks, I could have seven x that million like it was crazy. The deals around were just mental. Like I remember one person, a real estate agent called me up and said, Lloyd, do you want to buy this apartment in service paradise for $49,000? I was like, nah. And

looking back, I'm like, idiot. But because I've seen that happen, and I know that this happens, like, A

correction of 10%, just so you know what we've experienced lately, it happens like once or twice a year. Once every year, once every 18 months, okay, let's say. A 20% correction or crash or a bear market, it'll actually happen every three to four years. And then an absolute collapse, like a stock market crash by 30% or more like the GFC, it'll

happen every say 12 to 15 years. So I'm not even like, Guessing it's gonna happen again It will you have to understand it will so the people at the moment that are like clamoring up and getting all this Borrowings to buy property at the moment and people that are like leveraged up and they think it's all gonna be roses like it is I've got some news for you. It ain't like one day this

will happen again. So how do you prepare for it? Well, the first thing is to educate yourself so you can dominate and and leverage it when it happens But the other thing is don't overgear Like property can't, a good idea becomes a bad idea when it's done to the nth degree. So just be very careful if you're getting five, six, seven, eight, 10 properties and you owe a lot of money. Interest rates can spike very quickly because in 1974, there was a oil embargo and actually spiked oil massively and

interest rates went to 17%. Now, if all of you got interest rates of 17% because of an oil embargo, you're all cooked, promise you. So that's gonna cause a massive collapse in real estate. Now that's a possibility. So it doesn't mean be scared, it means be ready. And so that's why it's nice to have a bit of cash always on the side. So when deals like this pop up, you can leverage it, you can jump in and take advantage of

it. But also means if you're not totally leveraged, and you've got multiple income streams, you're prepared for the worst because without a doubt, this will happen again. In fact, we might be seeing the beginnings of it now with AI, because AI is the new internet. So you're going to see a lot of this hype happen like the dot com bubble, and all this investment may pay back, you may see a bigger crash than what we just saw in the

last year. Just quickly, if you're ready to take control of your finances, but feel stuck on where to start, I have a solution. My book Money Buys Happiness simplifies investing and wealth building with practical steps to help you achieve financial peace. Get your copy via the link in the show notes and let's get your money working for you. Now back to the episode. So that is the GFC. And the latest one that has happened, the latest panic was of course

COVID. And this happened not very long ago. It was like five years ago. Can you believe it's five years? Five years ago. And of course, what happened was this. The whole world thought that this common cold, I don't know if you know this, but the common cold is a coronavirus, just so you know. All common colds are coronaviruses, without going into too much detail. They called that because they got little coronas on them. I don't know, that's how they got a pre-med degree. They're just cold. And I

got it, and I was like, that sucks, but it's fine, I didn't die. And what happened was the whole world through social media thought everyone was gonna collapse and die. So the whole world and the mainstream media put everyone in a little panic. And of course they closed the world. No way they're going to close the world down. No way they're going to close airports. No way. No one is this stupid. No people are this stupid. I just spat on the mic there. No one is this stupid. I

was just cleaning it off. No one is this stupid that they're going to close the world down. But what I learned was never underestimate the stupidity of governments and the public. I mean, recently we had a cyclone and all the same stupid people went in to buy toilet paper. What the hell are you going to do with toilet paper coming out of your wazoo? What the heck are you doing? The same thing happened. I'm like, surely people are going

there. Surely the government's not that dumb. Yes, they are. So I'm like, oh my God, I underestimated the stupidity of what happens in panics, okay? So there's another lesson learned there that when the world gets to a panic, you start to see massive stupidity, all right? So I'm like, oh my God, this is actually happening. Now, thankfully I had saved up some money then because I'd learned from the GFC. And when that happened, I knew that it was a common cold. I knew that the survival rates

were very high. And I knew that in a year or two, we'd come out of this very quickly when they discovered it. So I knew that the market would correct very fast. So I thought that this drop is a once in a lifetime opportunity. So where do we look to put our money? We deployed it into travel companies. And we were buying travel companies when they'd sunk by like 90%. And we were buying

stocks, you know, like across the market. And so that we were able to grow a lot of wealth in that period of time quite quickly because we knew it was going to correct again. Every storm runs out of rain, like every big market collapse has

recovered. every single one so of course it'll recover again just the worst thing you can do is panic to the point where you sell at the bottom all right that's what you'd want to absolutely avoid that so that's the latest one it was covid it was caused by panic the late the the the correction lately has been a 10 one will we see a big one in the future it's highly likely when No one

knows. So you just have to be prepared for it. So even massive crashes, whilst they seem really bad, can create massive opportunities for you. And of course, history doesn't repeat, but it rhymes. So there will be this sort of pattern that happens where there's a boom, then there's massive greed, then there's a massive bust, and then there's fear. And that whole cycle will start again. But it does create opportunity. You

have to be ready to take advantage of those opportunities. But also, make sure you understand that the media's job is to create panic and noise and fear in you. Like it's his job, okay? So don't just jump on the news and watch and think, oh my God, the world's crashing, we're all gonna die. No, go and do your own research and look for the noise. and look for then the signal beyond the noise, all right? Emotional investors lose, disciplined, intelligent, educated investors win. So you've

got to choose, which one will you be? The panic-stricken, emotional one, or the disciplined, educated one? Because it does make a difference, all right? So here's what you want to do when it happens. The first thing to do is just zoom out. step back and understand that the S&P 500, which is the market, has grown massively in the last 100 years. It's incredible. In fact, if you put $10,000 in 1942 before the war ended, you would now have $54 million. So it's bumpy, but

the world's going to progress. So don't bet on the end of the world, because even if you're right, you don't make any money. So stop trying to time the market. Time in the market is better than time in the market. Use the downturns to accumulate more assets faster,

stocks, ETFs, and property, and automate your investing, which means start to dollar cost average, which means buy the same thing that you're wanting to invest in long term, but buy it periodically at the same time. So every month, every quarter, same amount, same time, same amount, same time, same amount, same time. Because if you were to do that with your shopping, you buy the same food, same time each week, sometimes there's gonna be some deals, sometimes

there's not. But over time, you're gonna average out your buying and you're gonna get it for better prices, okay? So don't follow the hype, study history. And here's a final thought for you. The market doesn't repeat perfectly. But as I said earlier, it does rhyme. So if you understand the patterns like I've explained in this episode, you'll see what it is all about. And you'll kind of understand, well, it's going to come again. Will I be ready

or not? And it's going to run out of rain. The storm will actually disappear too. So having this understanding is one of the great wealth building opportunities of your life. Because if you're young enough, you haven't experienced it before. But I promise you, at some point, it's coming. All right. So make sure you take this information and absolutely apply it. All right. Because history shows us those who stay calm, invested and smart come

out on top. All right. It's not the end of the world. It's just another chapter in a very familiar story. So zoom out. Stay the course. If you play it right, this could be the moment that changes your financial future forever. So thanks for listening and go check out the next episode and the next video on YouTube. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe to

us on YouTube so you never miss an episode. And if you're serious about building wealth, make sure to check out the links in the show notes and follow me on all social media platforms at LloydJamesRoss for