15 September 2008: Lehman Brothers files for bankruptcy
Lehman Brothers, a 158-year-old investment bank, filed for bankruptcy after weekend rescue talks failed and the government declined to step in. With more than $600 billion in assets, it was the largest bankruptcy in US history. Markets plunged, credit froze and money market funds came under pressure. Lehman's collapse turned a housing downturn into a full-blown global financial crisis.
The lesson: Excessive leverage can destroy even a century-old institution almost overnight.
What it meant for investors
$1,000 in Lehman Brothers at the start of 2008 → $0 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. Lehman Brothers went to zero, so the position is worth nothing at all; the index turned the same money into $4,626.
What Lehman Brothers teaches: Leverage magnifies small asset losses into total losses; a firm funded by short-term borrowing can fail in days when lenders lose confidence.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2005 | $88.00 | $0 | $5,763 |
| 2007 | $78.00 | $0 | $4,789 |
| 2008 | $65.00 | $0 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought Lehman Brothers? Every starting year and the full story →
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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