David Rosenberg started his career on Black Monday in 1987. Here's his advice to investors during this sell-off.

• David Rosenberg's first day as a Wall Street economist was October 19, 1987, when stocks fell 22%.
• Rosenberg's main takeaway from Black Monday was learning to assess why a drawdown was happening.
• While 1987's crash was a liquidity event, 2025's correction is due to fundamental reasons, he said.

David Rosenberg has made a career out of bearish forecasts, most notably his recession call ahead of the Global Financial Crisis and the US housing bubble in the mid-2000s.

So it's fitting that the famed economist's first day on the job came on October 19, 1987 — better known as Black Monday — when the Dow Jones Industrial Average dropped more than 22% in a day.

"It was my first day as a Street economist at the Bank of Nova Scotia," Rosenberg said. "It was, in two words or less, pure pandemonium."

With tariffs sinking stocks in recent days — both the Dow and the S&P 500 dropped more than 11% in just three trading days — Business Insider asked Rosenberg about what he learned on Day 1 of his career, and the lesson he would pass along to investors.

The biggest thing Black Monday taught him was to distinguish between a liquidity-driven selling event and a fundamental bear-market drawdown, he said.

During the former, investors are forced to sell and raise cash because of unusual market conditions, not because the economic or earning outlooks worsen. Think "Volmageddon" in 2018, when a record volatility spike blew up trades that had bet on calm markets, or the yen carry trade unwinding in 2024.

The 1987 drop, the biggest since the 1929 crash, was another liquidity-driven event. It was due to panic-driven selling, partly thanks to automatic trading programs. The selling stopped relatively quickly, however, and was followed by a rapid market recovery.

But Rosenberg said the current sell-off is different because of the macroeconomic implications of President Donald Trump's tariff policies. He is forging ahead with import taxes on about 60 trading partners, including a 104% levy on Chinese goods set to kick in on Wednesday.

"The contrast to October 1987 is the economic backdrop today is at much greater risk," Rosenberg said. "What you had in 1987 was a heart attack as far as the market multiple was concerned, but there was no commensurate decline in earnings."

Investors are eagerly waiting to see if Trump drops his trade war. But Rosenberg thinks it's unlikely.

"This is something deeply philosophical to Donald Trump," he said. "Trade and tariffs are as important as religion, and he's been talking about this not just for years but for decades."

Trump has shown some willingness to negotiate. On Monday, for example, he said the European Union could see "relief" from his tariffs if it bought $350 billion of US oil. But given Trump's volatile approach to implementing the import taxes, it's unclear what that relief would look like and how permanent it would be.

"I don't believe for a second that Donald Trump is going to walk these back under any circumstances," he said. "If he does, I'd be pleasantly surprised. But I certainly would not be basing an investment decision on Donald Trump."

If Trump does keep his tariffs on, the US economy will head toward a recession, if it isn't already in one, Rosenberg warned.

"Recession risks are clearly building. I think Larry Fink is right that a recession is probably already underway," he said, referencing the BlackRock CEO's comments earlier this week. "This could end up being worse than the 1930s in the sense that the global economy is so intertwined and the global supply chain is so complex."