4-22-25: Three Mid-April Shocks Launched Three “Lost Decades”

by Gary Alexander

April 22, 2025

There were three mid-April shocks at the start of three decades in the last century – April in 1930, 1970 and 2000 – which led to the three worst decades in the last century. With the centennial of 1929 coming up, maybe we can learn some lessons from what tripped the market’s trigger in those three past Aprils.

#1: April 17, 1930: Tariffs and Fed Blunders Turned a Correction into a Great Depression

In hindsight, the Great Depression began with the market crash of 1929, but in early 1930 there was no Great Depression in sight until mid-1930. As of April 17, 1930, the Dow recovered 48% from its low in just five months, from a bottom of 198.69 on November 13, 1929, all the way back to 294.07 in April.

But then, something startling happened: The Dow declined 86% in under 27 months. That was the “real” crash. In hindsight, the “crash of 1929” did not need to become the Great Depression of the 1930s, but two or three political blunders in 1930 turned a normal stock market correction into a disaster.

This chart shows the market recovery from November 1929 to April 1930 before the real crash began:

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

This chart also shows that the crash of 1929 was simply a “reversion to the mean,” taking the Dow back to its previous moderate levels of mid-1928 before the blow-off bubble phase began.  I know that many books have been written about the cause of the crash (I’ve read most of them), but the main cause is too much speculation in the 1-2 previous years.  Investors were giddy, bidding up stocks on margin, creating bubbles which begged to be burst, so we saw a decade of “mean reversion” after 1929, 1969 and 1999.

In the 1930s, the primary trigger to set off the 1930s Depression was a sharp decline in money supply, engineered by the Fed. From the fall of 1930 through the winter of 1932-33, money supply fell by nearly 30 percent. This declining supply of funds reduced average prices by an equivalent amount. This data comes from Milton Friedman and Anna Schwartz’s “Monetary History of the U.S.” and is now part of official Federal Reserve history – so much so that future Fed Chair Ben Bernanke told Friedman in 2002:

“Regarding the Great Depression, … we did it. We’re very sorry. … We won’t do it again.”

—Ben Bernanke, November 8, 2002, in a speech honoring Milton Friedman on his 90th Birthday

However, that Federal Reserve blunder didn’t begin until late 1930. What sent the market south in April to July 1930 was more visible – the Smoot-Hawley tariffs advancing through Congress, turning a normal stock market correction into something incredibly more severe by late 1930. This tariff bill began its long review process in 1929, before the crash, but it passed the Senate on March 24, 1930, and was signed into law by President Herbert Hoover on June 17, despite the urgent plea from a petition signed by 1,028 economists that it would cause retaliatory tariffs and engender a trade was, choking off global trade.

There were other political blunders, like freezing high wages in a time of deflation, and nationalizing businesses, but tariffs and tightening were the major cause. The Fed has learned from history. Now, it’s up to the President and his advisors to study the history of the potential damage from high tariff barriers.

#2: April 20, 1970: A Tech Stock Crash Launched the Stagflationary ‘70s

The S&P 500 fell almost 20% in the second quarter of 1970, but nearly all of the loss came in the five weeks from April 20 to May 26 – with 19% declines in both the Dow Jones index and S&P 500, but 1970 was a lot like the tech stock bubble of 1999-2000, with tech stocks falling far more than the blue chip indexes. Many high-flying computer stocks fell 80% from their peak in late 1968 to the 1970 lows. For instance, Ross Perot’s Electronic Data Systems (EDS) lost $60 per share on Earth Day, April 22, 1970.

The news of the day may have fueled part of the panic: First, the nation sweated through Apollo 13’s near-fatal moon mission (April 11-17), followed by Nixon’s incursion into Cambodia (April 29) and the resulting campus riots and shootings at Kent State (May 4) and Jackson State (May 15), all amidst a business recession. But the main cause of the crash, like now, was low or no earnings in bubble stocks.

The “conglomerates” fared even worse than the tech stocks. In the January 1971 issue of Dun’s Review, Max Shapiro estimated that an index of the 10 leading conglomerates of the day fell 86% from their 1969 peak to their 1970 low. Ling-Temco-Vaught was down 95%, from $135 a share to $7. Litton Industries was down 86%, from $104 to $15. Walter Kidde was off 82%. (I remember that one well, since we got 10 shares of Kidde as our 1968 wedding gift from my aunt Margie. I had to bail out on that one by 1973).

Why did tech stocks soar so high? The 1960s was a decade of dreams – and fantasies: Fly a man to the moon and back. Win wars and end poverty – guns and butter. Computerize everything and amalgamate everything else. Sooner or later, a day of reckoning would come. The myth of rapid growth (with no inflation) led investors to think that compound returns of 30% could go on forever, but that dream fell to earth on Earth Day, and we entered a decade of stagflation – stagnation plus inflation – until 1982.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

#3: April 10-14-2000: NASDAQ Fell 25% in One Week – Launching a Lost Decade

The NASDAQ Composite did not launch until January 1, 1971, so it did not measure the tech stock crash of 1970 in all its magnitude, but the NASDAQ Composite clearly took the hit in the “dot.com” bubble of 2000-02, which focused on the demise of tech stocks more than the general market. In fact, the difference between the contents of the old Dow Jones Industrial Average and NASDAQ Composite was so dramatic that NASDAQ gained 19.2% in during February 2000 while the Dow lost 7.4%, a difference of 26.6%.

The opposite happened in March, April and May 2000, as the Dow gained 3.9% in those months while NASDAQ lost 27.6%, a difference of 31.5%! Nearly all of NASDAQ’s decline came in one week, April 10-14, one of the wildest weeks in market history. That week began with a 258-point 5.8% NASDAQ drop, from 4446 to 4188. On the same day, the Dow rose 75 points. Here is the five-day -25.2% massacre:

From that point, as the following chart shows, we had a double-dip decline in 2000, then another big drop in 2002, followed by a five-year recovery – but then came the biggest S&P drop, in the Financial Crisis of 2007-09. In the end, the major indexes struggled for a decade to recover their early 2000 peaks with the Dow not emerging from negative territory in real terms and for keeps until 2014, the S&P re-emerging in 2016 and NASDAQ not staying above its old peak level until 2019 – just before COVID!

Advisor Perspectives

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

The big lesson in 2000-09 was that investors were caught in a shell game of hidden bubbles, saying, “I’ll never fall for dot-com bubbles again. I’ll rely on solid real estate,” never suspecting that shady investment bankers with 5-star reputations would slap AAA-ratings on junk real estate loans in a real estate bubble.

All three “lost decades” came after major market advances, usually led by a few tech stocks, luring in speculative investors on margin, to a bubble peak, so plan ahead for any danger signals like that as we approach the centennial of October 1929 and the possibility of a bubble bursting into a “terrible 30s.”