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Remembering 2008 and the Fall of Lehman

Remembering 2008 and the Fall of Lehman

Hard to believe it was 10 years ago I was on the trade desk at a small boutique investment firm.  I actually did not sleep Sunday into Monday because I wrote my Wealth Management Essentials Exam that morning at 9am. But at 1am when the uk markets were opening Lehman was Gone.  We all knew it was toast but didn’t know what it would do to the system.

The New York Times created this graphic that Shows the banks plummet and vanish during that period, I have kept it in my favourite websites since that time

Here is an image below, but click here to view the graphic. (you may need to update your Flash to view)

Source: New York Times.

Over the month of September and October of 2008 we had unimaginable volatility on a Multi generational level.  Each one these brackets below is a 7-10% market swing in a single day. Basically a good investment year lost in a single day(the yellow line is 15% move in one single day). That despair lasted until the spring of 2009.

I believe I won’t go through this again in my career and ideally my life, it is a multigenerational crash level event and a complete system failure.  Lets be thankful ours is behind us.

Source Bloomberg, Stuchberry Group- Daily Volatility during 2008 crisis

Looking forward.

Demographically speaking we are in a good place- millennials are creating households slowly but surely – one of the largest population demographics 5 years from now does not even exist yet.

Technological innovation and disruption is creating incredible efficiencies never before utilized. In 2008, Amazon had revenue of 20bl now it is over 250bl.

In 2007-8 Lehman Etc had regulatory capital levels of 2-5% and went bankrupt, conversely virtually all banks now are 10-14% tier one capital.

Debt levels in the US are far lower than pre-crisis levels, and corporate balance sheets are full of cash. In 2008, Microsoft had cash of 23bl, its now 133bl; Google had cash of 15bl, its now 102bl.

We will carry this fear of this market for the rest of this investing generation, but I think its safe to say it won’t happen like this ever again.

The 10 years since the bottom was great for investors and I think the next ten years are going to be even better than the last 10 years!

Chris

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The information contained herein has been provided for information purposes only.  The information has been drawn from sources believed to be reliable.  Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment.  The information does not provide financial, legal, tax or investment advice.  Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.  This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document.  Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.  All insurance products and services are offered by life licensed advisors of Wellington-Altus insurance Inc. or other insurance companies separate from WAPW.  WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.