Time flies when you're having fun. That saying seems to capture the feeling of the past ten years following the market turmoil of 2008. With a few bumps along the way, since the market lows of early 2009, the stock market has been on a tear.
Now that we're in March and the anniversaries of important Great Recession events approach, it's interesting to sift through market research and news stories from back then. Some of the analysis stands out as oddly prescient, while some of the events are still gut-wrenching to read about even today.
One such event was the fall of the now infamous investment bank Bear Stearns. It was this week, ten years ago, that the firm found itself without a chair when the subprime mortgage music stopped.
In early 2007, just a year before its ultimate collapse, Bear Stearns had been riding high on manufacturing and selling fancy bonds and derivatives based on subprime mortgages and other debt. Leverage was high, and nobody seemed to worry much about it. So long as everyone and everything involved continued to hum along, no amount of leverage seemed too great. Analysts touted the firm's earnings record and continually raised price targets for the company's stock to over $180 per share.
But a few short months later analysts started changing their tune. Troubles were percolating in the housing market and Bear Stearns began losing money after decades of profitability. That summer two of Bear's subprime mortgage-based hedge funds failed, costing billions. Keeping investors and depositors confident was huge for the firm. But confidence quickly eroded and that's when the wheels started coming off. The firm's share price started dropping, declining by more than half into the new year.