10 Year Anniversary of the Big Lehman Crash...
Posted: Sat Sep 08, 2018 7:04 pmThe 10-year anniversary of Lehman Brothers (then traded under the stock ticker symbol "LEH") is coming up on September 15. Yes, it has been almost 10 years since Lehman shocked the stock market and declared bankruptcy on Monday, September 15, 2008. Some would say this was the straw that broke the proverbial camel's back. This mushroomed into a worldwide financial news event in no time. I remember people talking about collapses in places like Ireland and Iceland, of all places. Iceland? How in the world could that tiny island be in trouble?
At the time I worked in the financial industry as a stock broker. I had been in the biz for 11+ years and had followed the markets and traded well before that. I experienced first hand the Asian Contagian, the Tech Bubble, the 911 Terrorist Attacks, and NOTHING was quite like Lehman. Perhaps part of that was due to technology. Although lots of people used the web in the late 90's, the internet itself wasn't nearly as mature as it was a decade later. So perhaps that helped spread the wildfire.
Oh yeah, as if the Lehman news wasn't enough there were two other big stories that day. Insurance giant AIG (Ticker: AIG) said they needed a $100 billion bailout from the U.S. government or they too would declare bankruptcy. And story number three was that Bank of America (Ticker: BAC) was buying Merrill Lynch (Ticker: MER). Normally the target of a buyout could easily go up perhaps 20-40% on the day of the announcement. Merrill's stock went up just one penny that day! Wow- what a day!
Two of the Big 3 auto makers (GM (Ticker: GM) and Chrysler (Ticker: DCX)) declared bankruptcy shortly thereafter and Ford's stock (Ticker: F) was teetering near $1 a share. Was it a screaming buy at that price, or would it declare bankruptcy as well to say goodbye to a mountain of debt? Nobody really knew at the time- it was just that wild. Footnote: with the full benefit of 20/20 hindsight- it was a screaming buy and went back to $10+ pretty quickly.
I remember over a year in advance of the day (specifically on 8/3/07) hearing Jim Cramer's famous rant to Erin Burnett of CNBC when he referred to the Fed and said "they know nothing". He was early. Then after the collapse began (early October, 2008- I don't have the exact date) I remember hearing him on satellite radio while visiting a relative in Michigan. He told listeners not to commit any new capital to the stock market unless they could sit on it for at least five years. And he was very emphatic about this. Fortunately the market came back a lot faster than that.
Until the market bottomed almost 6 months after Lehman declared bankruptcy (the bottom was in place on March 9, 2009), it was truly a wild time.
For those who are too young to remember this time or perhaps didn't have any skin in the game, there were quite a few movies made about the collapse. A documentary that I saw at a theater and later bought was called Inside Job (2010), as narrated by Matt Damon. This movie used actual clips of many people (Ben Bernanke, Alan Greenspan, Maria Bartiromo, Eliot Spitzer, George Soros and many others) to detail the events. I was so overwhelmed by the details and by the admissions that people made that I started taking notes. I ended up with a Word document that was 7-8 pages long.
It was truly quite an event. Oh yeah, I have a stock certificate of Lehman that I bought online to keep as a momento of this unbelievable time.
At the time I worked in the financial industry as a stock broker. I had been in the biz for 11+ years and had followed the markets and traded well before that. I experienced first hand the Asian Contagian, the Tech Bubble, the 911 Terrorist Attacks, and NOTHING was quite like Lehman. Perhaps part of that was due to technology. Although lots of people used the web in the late 90's, the internet itself wasn't nearly as mature as it was a decade later. So perhaps that helped spread the wildfire.
Oh yeah, as if the Lehman news wasn't enough there were two other big stories that day. Insurance giant AIG (Ticker: AIG) said they needed a $100 billion bailout from the U.S. government or they too would declare bankruptcy. And story number three was that Bank of America (Ticker: BAC) was buying Merrill Lynch (Ticker: MER). Normally the target of a buyout could easily go up perhaps 20-40% on the day of the announcement. Merrill's stock went up just one penny that day! Wow- what a day!
Two of the Big 3 auto makers (GM (Ticker: GM) and Chrysler (Ticker: DCX)) declared bankruptcy shortly thereafter and Ford's stock (Ticker: F) was teetering near $1 a share. Was it a screaming buy at that price, or would it declare bankruptcy as well to say goodbye to a mountain of debt? Nobody really knew at the time- it was just that wild. Footnote: with the full benefit of 20/20 hindsight- it was a screaming buy and went back to $10+ pretty quickly.
I remember over a year in advance of the day (specifically on 8/3/07) hearing Jim Cramer's famous rant to Erin Burnett of CNBC when he referred to the Fed and said "they know nothing". He was early. Then after the collapse began (early October, 2008- I don't have the exact date) I remember hearing him on satellite radio while visiting a relative in Michigan. He told listeners not to commit any new capital to the stock market unless they could sit on it for at least five years. And he was very emphatic about this. Fortunately the market came back a lot faster than that.
Until the market bottomed almost 6 months after Lehman declared bankruptcy (the bottom was in place on March 9, 2009), it was truly a wild time.
For those who are too young to remember this time or perhaps didn't have any skin in the game, there were quite a few movies made about the collapse. A documentary that I saw at a theater and later bought was called Inside Job (2010), as narrated by Matt Damon. This movie used actual clips of many people (Ben Bernanke, Alan Greenspan, Maria Bartiromo, Eliot Spitzer, George Soros and many others) to detail the events. I was so overwhelmed by the details and by the admissions that people made that I started taking notes. I ended up with a Word document that was 7-8 pages long.
It was truly quite an event. Oh yeah, I have a stock certificate of Lehman that I bought online to keep as a momento of this unbelievable time.