What if you bought Lehman Brothers in 1995?
US Finance · Bank. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0× · S&P 500 same money: $14,783
Every dollar is gone. Lehman Brothers collapsed in September 2008, so $1,000 invested in any of these years is worth exactly nothing today.
The story
Lehman Brothers had a 158-year history, though it spent much of the 1980s inside American Express before being spun off as an independent public company in 1994. Under chief executive Richard Fuld it became a leading bond and mortgage house, and through the 2000s it leaned heavily into real estate, buying mortgage originators and holding large positions in commercial property and mortgage-backed securities, all financed with borrowed money.
When the mortgage market cracked in 2007, Lehman's leverage, at times more than thirty times its equity, left little room for error. After Bear Stearns was rescued in March 2008, investors questioned Lehman's valuations and its reliance on short-term funding. Capital-raising efforts fell short, takeover talks with Bank of America and Barclays collapsed, and the government declined to provide support. On September 15, 2008, Lehman filed the largest bankruptcy in US history. Shareholders were wiped out. Later investigations revealed accounting maneuvers, known as Repo 105, used to make its balance sheet appear less leveraged at quarter-ends.
The lesson: Leverage magnifies small asset losses into total losses; a firm funded by short-term borrowing can fail in days when lenders lose confidence.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 1995 | $5.00 | $0 | $14,783 | — |
| 2000 | $40.00 | $0 | $4,626 | — |
| 2003 | $55.00 | $0 | $7,727 | — |
| 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
There was no good entry point: every starting year ends at zero. The same $1,000 in the S&P 500 from 1995 would be $14,783 today.
On this day
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. Lehman Brothers is one of 258 positions on the wheel — including the ones that went to zero.
Play Sixty-40More in US Finance
- What if you bought JPMorgan?
- What if you bought Bank of America?
- What if you bought Wells Fargo?
- What if you bought Goldman Sachs?
- What if you bought Morgan Stanley?
- What if you bought Citigroup?