What if you bought Washington Mutual in 2000?
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: $4,626
Every dollar is gone. Washington Mutual was seized in 2008, so $1,000 invested in any of these years is worth exactly nothing today.
The story
Washington Mutual started as a Seattle savings and loan and, under Kerry Killinger, grew through acquisitions into the largest thrift in the country, with a strategy of being the Walmart of banking. It pushed hard into home lending, including option adjustable-rate mortgages that let borrowers pay less than the interest owed, with the difference added to their loan balance.
When home prices fell, those loans turned toxic. Losses mounted through 2007 and 2008. In April 2008 a private-equity group led by TPG invested about seven billion dollars, hoping to stabilize the bank, but within months it was wiped out. Depositors withdrew billions in September 2008, and on September 25 regulators seized the bank, the largest bank failure in US history. JPMorgan Chase bought its deposits and branches for under two billion dollars overnight, without government assistance. Shareholders and most bondholders were left with little or nothing after the holding company went through bankruptcy.
The lesson: A lender's product innovations in a boom deserve skepticism; loans designed to make payments affordable now can create losses later.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $25.00 | $0 | $4,626 | — |
| 2003 | $35.00 | $0 | $7,727 | — |
| 2005 | $40.00 | $0 | $5,763 | — |
| 2007 | $45.00 | $0 | $4,789 | — |
| 2008 | $14.00 | $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 2000 would be $4,626 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. Washington Mutual is one of 258 positions on the wheel — including the ones that went to zero.
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