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The Markets Two Years After The Lehman Brothers Bankruptcy Filing

It was exactly 2 years ago today that Lehman Brothers filed for bankruptcy when it could not find a buyer and the US Government would not bail out the company. 

Here is a look at the markets then and now:

The S&P 500 (SPX) closed at 1,192.70 on 9/15/08. It is now about 5.9% lower

The NASDAQ Composite (IXIC) closed at 2,179.91 on 9/15/08. It is now about 5.5% higher

The NASDAQ 100 (NDX) closed at 1,705.46 on 9/15/08. It is now about 13.4% higher. 

The Dow Jones Industrials (DJIA) closed at 10,917.51 on 9/15/08. It is now about 3.3% lower. Of course, many DJIA stocks have since been tossed out such as General Motors. 

The Russell 2000 (RUT) closed at 689.76 on 9/15/08. It is now about 5.6% lower. 

Some thoughts and conclusions:

1. Who said tech was dead? If you were indexed to the either of the NASDAQ indexes, you would have been better off now. 

2. We had plenty of panics, mini panics and a flash crash between then and now. It just goes to show you how panicking is not an investment strategy worth following. 

3. If you add back in the dividends for the SPX and DJIA over the past two years, you are about even. That says plenty for the power of dividends.

4. In the future, we will likely look at the past two years as we have other periods of market dislocations, as abhorrent yet necessary parts of the economic and market cycle from which we will have learned many lesson.

5. Corporations have used the last two years to continue to generate profits, build up cash, reduce debt and adapt to new government enacted anti-business laws and regulations. Imagine what will happen once the economy does gain traction?

Next month is the second anniversary of Warren Buffett's "Buy American" New York Times (NYT) Op Ed piece. When that anniversary passes, I will take a look at how Buffett's advice has panned out. 

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC owned shares of Berkshire Hathaway, Class B (BRK/B) --- although positions can change at any time.

For more information on investing with LakeView Asset Management, LLC please visit the company's website


 



Posted By Scott Rothbort at September 15, 2010

Scott Rothbort

About Me :

SCOTT ROTHBORT

THE FINANCE PROFESSOR

 

Scott Rothbort has over 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. He also is the founder and manager of the social networking educational website TheFinanceProfessor.com and a frequent contributor the TheStreet.com where he also writes a weekly article as The Finance Professor

Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities.

Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Term Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University.

For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com.

 


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