Blood and Panic in the Markets - Opportunity or Trap? When to Invest and What Returns Are Realistic?
Blood and panic in the markets - opportunity or trap?
When to invest in the capital market and what returns are realistic?
The article and some of the data used date from the period April 8-10, 2025.
Why are capital markets falling now?
After an optimistic 2024, the beginning of 2025 brought a sudden change in direction on financial markets.
The current decline was triggered by a new round of trade tariffs imposed by Donald Trump. The protectionist measures applied to China and other strategic partners generated a chain of reactions: rising trade tensions, higher costs for companies, and fears of a possible global economic slowdown.
In this context, investors rushed to reduce their exposure to risk, and markets entered a bear market phase.
What is a bear market?
A bear market (declining market) is defined by a market decline of at least 20%, caused by economic factors (such as crises, recessions, or depressions), geopolitical factors, or natural disasters. Such periods generally appear once every few years and can last from several months to several years.
These are essential stages in the economic cycle and have a major impact on the management of investment portfolios, which is why it is important to understand and anticipate them.
In such moments, fear dominates the market, and many investors choose to sell at a loss. Still, beyond the panic, these declines are a natural part of economic development. History has shown that these very turbulent periods offer some of the best opportunities for those who invest intelligently and for the long term.
The history of returns after crises
History shows us that bear markets in the U.S. have generated, almost without exception, solid buying opportunities, because prices have tended to recover and rise significantly over the following 1-5 years.
The chart below illustrates the historical daily performance of the S&P 500 index during falling market periods (bear market) and rising market periods (bull market), starting in 1942. Analyzing economic cycles - expansion and recession - gives us a useful and balanced perspective for long-term investments.
Bull market: on average, these periods lasted 4.3 years and generated cumulative growth of about 150%.
Bear market: on average, they lasted 11.1 months and were marked by a cumulative decline of about -31.7%.
Historically, in an average 5-year cycle, the market generally declines for only one year, followed by about 4 years of growth. Moreover, the return from one year of a rising market (Bull Market) tends to compensate for, and even exceed, the losses of a declining year.
The possible profit if you know (or do not know) when to invest in the capital market
📉 Worst case: If you invest right before a Bear Market begins, historical data shows that, on average, after about 5 years, the return is +75%. That means an average annual profit of 18.75%. Can you find a comparable "interest rate" somewhere else?
📈 Best case: If you invest at the end of a Bear Market, you may benefit, on average, from a return of about 35% per year. And at present, we are fairly close to this scenario, because the S&P 500 index has already covered around 65% of the average path of a declining market.
📊 Historical curiosities:
42% of the best days of the S&P 500 over the last 20 years occurred during a Bear Market.
36% of the best days were recorded in the first two months of a Bull Market - often before investors realized that the market had already changed direction.
Our investment experience - how we grew through crises
We started with trading in 2009, but we began truly exploring the world of investments starting in 2018. What followed? Seven years full of lessons, challenges, and opportunities - exactly as market reality is. We went through three major crises: the Covid pandemic, the outbreak of war, and the current crisis (which will probably remain in history as the "Tariff Crisis" or perhaps the "Trump Crisis").
💰 2020 - the Covid crisis
We entered at exactly the right moment, from the lowest market levels. The result? A fast market recovery, and for us a portfolio with +47% growth locked in that year. It was the moment that truly awakened our appetite for investments.
💹 2022 - the war crisis
When the S&P 500 was ending the year at -20%, we managed to close the year with a modest but significant +2%. And the investments made during that period were gradually capitalized on in the following years.
🔄 The present - a new challenge
The current crisis is testing us again, but with the lessons of the past and perfected strategies, we are better prepared than ever and already know when to invest in the capital market.
The previous forecast regarding the end of the decline and the possible returns of a potential upward trend was presented in Trading Club and in an interview with BusinessClass magazine.
In that material, we clearly indicated that, in our opinion, the market was facing a Bull Market, with a price target for the S&P 500 in the 6000-dollar area.
After the article was published, the evolution confirmed the forecast: the index rose slightly above expectations - up to 6150 USD. After reaching the target, a significant correction followed.
An interesting aspect is that, during the rise toward the 6000$ target, we identified a new favorable point for investments: the August 2024 correction. We publicly signaled that it was a suitable moment for accumulation. The market proved us right - from that low, the S&P 500 rose for another 5 consecutive months.
Once the American index reached the 6000$ threshold, we stated that a significant correction was not only possible, but necessary. We emphasized the importance of "unloading" profitable positions and making a healthy re-entry around current prices. From a technical point of view, it was obvious. Only a fundamental catalyst was still missing. And indeed, it appeared.
Today, we are going through the third crisis in our investment experience. And, as every time, the moment has come to state our point of view.
When to invest in the capital market?
The simple answer? When most people run away.
The educated answer? After careful analysis - both fundamental and technical - of each financial asset. Together, these methods can help you make intelligent and well-founded investment decisions.
Warren Buffett put it perfectly:
"Exit the market when everyone is enthusiastic and enter when panic is at its highest."
But how do we measure panic?
CNN Fear & Greed Index
👉 This extremely useful tool monitors market sentiment in real time - between extreme fear and exaggerated enthusiasm.
📉 On April 9, 2025, the index showed only 3/100 points - a level that reflects extreme panic.
🔎 History shows that these moments have often been among the most profitable entry points for long-term investors.
The most recent moment when the index reached such a low level was immediately after the outbreak of the war, in May 2022. Subsequently, the market experienced a period of 2 years of continuous S&P 500 growth.
CBOE Volatility Index (VIX)
Another essential indicator for evaluating the market climate, which helps you understand when to invest in the capital market, is the CBOE Volatility Index (VIX), also known as the market volatility barometer.
Given that volatility is often associated with negative market performance, the VIX-based investment strategy can also be used to identify potential investment opportunities when the indicator reaches or exceeds the 50-point threshold.
No investment strategy can guarantee exact forecasts. In addition, not every method is suitable for all investors.
If technical analysis could be compared with objects with a "real" profile - quantifiable and visible factors in market evolution - then fundamental analysis would be like an "object with a humanistic profile," difficult to measure and fully understand.
Fundamental analysis
The analysis of macroeconomic indicators and geopolitical events is the broadest method of evaluating financial markets and can provide valuable information for making investment decisions. It is based on factors that are often interpreted differently even by the most renowned economists. In addition, some events may be dictated by a single individual, may appear unexpectedly, and sometimes unfold unpredictably. Therefore, this time we will not give our opinion, because we are in a game with changing rules, where decisions are difficult to anticipate.
Technical analysis
In technical analysis, there are specific moments or reversal patterns - those moments when we want to catch the end of a decline and the beginning of an uptrend.
As for declines, they are divided into corrections and bear markets. Corrections are movements too small to represent a major concern for investors, but bear markets are the ones that become the subject of detailed study and forecasts, having a significant impact on investment decisions.
Capital market statistics
The history of the last 100 years of the U.S. financial market teaches us an essential principle: every decline caused by crises, recessions, and even depressions has not only been recovered, but often rewarded. Therefore, we have no reason to believe that this time will be different and that the U.S. will reach default, especially under Trump's leadership!
Every market decline represents an investment opportunity, and the deeper the fall, the greater the long-term profit potential.
Our current forecast
Referring to the main American index, the S&P 500, as was recently indicated in our Club, we believe it is a favorable moment to enter the market when the index falls toward the 5200$ and 4800$ range - an area already tested. We are convinced that this interval represents the first stage of significant discounts, bringing excellent opportunities for investors. Of course, prices may fall even further, even to 4200$ (only Trump knows 🤑 ). In this case, we will add new positions, but the current moment should by no means be missed for investing a significant part of funds.
Looking ahead, our forecast indicates a possible appreciation of the S&P 500 index to the 7200$-7500$ area over the next two or three years, which would represent growth of 40% - 50% from the lows reached during April 7-9, 2025. By the end of this year, it may be possible to test the current all-time high (6150$).
How much time do we have to catch the best discounts?
Analyzing past market evolution, we observe that during the war crisis, we had a window of about 4 months to buy at the lowest prices. By contrast, during the Covid crisis, to catch the bottom, we had only 2 weeks available. How the situation will evolve now is impossible to predict precisely. Still, it is certain that such phenomena must be studied carefully in advance, so that when the right moment appears, we are already prepared to act.
Can Moldovans invest in the international capital market?
The answer is YES. Moldovans have the possibility to invest on international financial exchanges using Moldovan personal documents. The process is much simpler than it may seem and, in addition, we offer full support for this stage. Depositing and withdrawing funds from investment accounts is done through Moldovan bank cards, as well as through accounts issued by banks in other countries.
How to invest intelligently?
Information is essential: Start by studying the prospects and risks associated with investments. Then decide whether they fit your financial goals. We offer free consultation online or at the Trading.md office.
Choose a trusted broker: Learn how to analyze a broker correctly (so you do not fall into scammers' trap) and compare the conditions offered by different providers. Choose the broker that suits you and open an account. During this stage, we provide technical and educational support within the investment lessons.
Managing your personal account: Follow market evolution and act according to the established plan. At the same time, be flexible and adjust your strategy based on market changes. Regarding the closing, reopening of investment trades, and withdrawal of funds, we will assist you free of charge throughout the collaboration.
Invest with confidence
Financial education teaches us how to manage financial resources efficiently and intelligently. One of the fundamental ideas is to learn to make money work for us, thereby avoiding its stagnation without interest. Of course, investments come with a certain degree of risk. But with education and strategy, they can become a sustainable source of long-term financial growth and steady passive income, especially if you understand the right moment when to invest in the capital market.
It is no coincidence that the richest people in the world are involved in financial markets! Investments in the capital market represent one of the few ways to grow capital with reduced risks and minimal effort. For this, we must follow a few fundamental rules:
Trust the strongest: Invest only in top giant companies.
Diversify: Invest in multiple companies, sectors, countries, etc.
Invested money must be "long": Plan a period of at least 3 years for your investments.
Start Now! Bull Market does not wait.
Although they varied in length and severity, the market has always recovered and, each time, reached new all-time highs.
Request a Free Consultation to learn investment strategies and which are the most promising stocks for investments in 2025.
Launch your own Investment Portfolio now.
Invest responsibly!
Translated from the Romanian original with AI assistance.