What if you bought Bear Stearns in 2000?
US Finance · Bank. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0.2× · S&P 500 same money: $4,626
$1,000 in Bear Stearns at the start of 2000 would be worth about $250 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
What happened: Bear Stearns was sold for $10 a share in March 2008.
The story
Bear Stearns was the scrappy outsider of Wall Street, known for hiring smart, hungry traders and for a famously independent streak; it notably refused to join the 1998 rescue of Long-Term Capital Management. By the mid-2000s it was a giant in mortgage-backed securities, and the stock peaked in early 2007, having roughly quadrupled since 2000.
The first visible crack came in June 2007, when two Bear-managed hedge funds that had bet heavily on subprime mortgages collapsed. Over the following months, mortgage losses grew and confidence in the firm waned. In March 2008, a run by clients and lenders drained its cash within days. Over a single weekend, the Federal Reserve arranged for JPMorgan to buy Bear, agreeing to absorb some of its riskiest assets. The initial price was two dollars a share, later raised to ten after shareholder outrage and legal concerns, compared with well over a hundred dollars a year earlier. It was the first major casualty of the financial crisis, a preview of what came six months later.
The lesson: Investment banks run on confidence and short-term funding; when either disappears, even a firm worth billions on Friday can be worth almost nothing by Monday.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $40.00 | $250 | $4,626 | 0.2× |
| 2003 | $60.00 | $167 | $7,727 | 0.2× |
| 2005 | $100 | $100 | $5,763 | 0.1× |
| 2007 | $160 | $62.50 | $4,789 | 0.1× |
| 2008 | $88.00 | $114 | $4,626 | 0.1× |
| 2010 | $10.00 | $1,000 | $6,071 | 1.0× |
| 2012 | $10.00 | $1,000 | $5,312 | 1.0× |
| 2015 | $10.00 | $1,000 | $3,301 | 1.0× |
| 2018 | $10.00 | $1,000 | $2,519 | 1.0× |
| 2020 | $10.00 | $1,000 | $2,092 | 1.0× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2010, turning $1,000 into $1,000. The S&P 500 from that same year: $6,071.
On this day
- 14 March 2008: Bear Stearns gets a lifeline that was not enough
- 29 May 2008: Bear Stearns shareholders accept their fate
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. Bear Stearns is one of 258 positions on the wheel — including the ones that went to zero.
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