The Real Lessons for Investors after 10 Years of Lehman’s Collapse

The Real Lessons for Investors after 10 Years of Lehman’s Collapse


Saturday marked the completion of 10 years since the collapse of Lehman Brothers, hence getting a stock market correction morphed into a global financial meltdown. What should people learn from that episode?

Everyone is aware of the fact that stocks in the U.S. had gone down 45% from the period of 12th September 2008 till 9th March 2009. The recession which accompanied the crisis had simply led to the destruction of 8 million jobs along with $500 billion in the Gross Domestic Product numbers of U.S. All those disasters had left people fear of a phase of depression, which would last for a good length of time. In spite of this entire trauma, the stocks managed to recover, just the manner in which they have always come back. Investors and other specialists in the market all had a tough time tackling that tough phase back in the year 2008, must remember this fact for the future.

When things become tough, there is always a way out. Bear markets like the one, we had faced 10 years back, could make one feel really horrendous. Losses that investors, brokers had suffered, could be really painful but still, if one’s outlook is oriented towards the long-term future, that would surely provide the much-needed strength to endure a bearish phase without having to see their goals getting derailed. The bull market, which comes up right after the bear, tends to repair the damage caused, much sooner than what people might actually feel, only if they have the courage to catch hold of the situation and make it count.

The last financial crisis, which is being talked of, happened to be America’s worst since the 1930s. Still, the stocks in the U.S. included dividends, hit new highs far less than 3.5 years after the phase where the stocks had stayed in the bottom.

Legends believe that Lehman had simply bloated themselves on subprime debt and securities backed by a mortgage, leading to insolvency and hampered the financial system. Certain banks and hedge funds had sold those securities at prices as if they were selling fire.