14 October 2008: Washington buys stakes in the big banks
The Treasury unveiled a $250 billion plan to inject capital directly into banks, with $125 billion going to nine of the largest, including Bank of America, JPMorgan and Citigroup. The day before, their chiefs had been summoned to the Treasury and told, more or less, to take the money. The government had become a part-owner of Wall Street, a sentence few would have believed a year earlier.
The lesson: In a real crisis, governments rewrite the rules faster than anyone expects.
What it meant for investors
$1,000 in Bank of America at the start of 2008 → $1,220 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. That is 1.2 times the money, but $3,406 less than a plain index fund made over the same years.
What Bank of America teaches: Acquisitions made at the top of a cycle can haunt shareholders for decades; buying a competitor cheaply in a panic is not the same as buying it well.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2008 | $41.00 | $1,220 | $4,626 |
| 2010 | $15.00 | $3,333 | $6,071 |
| 2012 | $6.00 | $8,333 | $5,312 |
green = beat the S&P 500 · red = lost money
What if you bought Bank of America? Every starting year and the full story →
More Bank of America history
- 16 January 2009: Bank of America needs a second rescue
- 25 August 2011: Buffett invests $5 billion in Bank of America
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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