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10 years after Lehman's bankruptcy, these are the big lessons for investors

MarketWatch logo MarketWatch 9/11/2018 Victor Reklaitis


a large building: Lehman's name was illuminated at its headquarters on Sept. 15, 2008, when it filed for bankruptcy. © Provided by Dow Jones & Company, Inc. Lehman's name was illuminated at its headquarters on Sept. 15, 2008, when it filed for bankruptcy.

The S&P 500 these days is dilly-dallying just below last month’s all-time high.

But if you zoom out, it’s a more impressive picture, with the stock benchmark up 141% since Lehman’s bankruptcy on Sept. 15, 2008.

And that watershed moment for the global financial crisis seems like the topic du jour.

“Everyone is reflecting upon the 10-year anniversary of Lehman Brothers’ bankruptcy filing,” writes JonesTrading’s Mike O’Rourke.

While there’s going to be scads of anniversary commentary, it’s right to look back and learn, says Josh “The Reformed Broker” Brown. “None of it is extraneous or tedious in my opinion. We have to remember it, the people, the details, the opinions, the turning points,” Brown writes.

So our call of the day focuses on Lehman’s lessons for investors. It comes from two sources — DataTrek Research co-founder Nicholas Colas and Andrew Thrasher, a portfolio manager at Financial Enhancement Group and the founder of Thrasher Analytics.

“Tech (XLK) , of course, is the largest reason the S&P 500 is 80% higher than its pre-Lehman highs,” Colas writes. The gauge is 84% above its pre-crisis peak, to be exact, and that old high was achieved on Oct. 9, 2007.

The big gains for Apple (AAPL) , Google parent Alphabet (GOOG) (GOOGL) and the like provide “an object lesson in the importance of technological innovation in driving stock prices over the long term,” Colas adds. “That, in the end, is the most important takeaway from Lehman Brothers and the financial crisis.”

Meanwhile, Thrasher says he developed an “aversion to risk” due to the crisis, but he’s turned that into a “positive professional attribute,” rather than grounds for staying totally in cash. He warns that you need to get in the investing game, if you’re still sitting on the sidelines after being spooked by the 2008-9 selloff or subsequent volatility.

“I hope others in my generation can shed their fears of investing,” Thrasher writes. “A lack of exposure to compound interest and market growth will hold back countless millennials unless action is taken soon.”

Read more:2  lessons from Lehman’s 2008 collapse can save your investments

Key market gauges

Futures for the Dow (YMU8) , S&P 500 (ESU8) and Nasdaq-100 (NQU8) are lower. That’s after the Dow (DJIA) dipped yesterday, while the S&P (SPX) and Nasdaq Composite (COMP)snapped four-session losing streaks.

Europe(XX:SXXP) is falling, after Asia finished mixed. Oil (CLV8) and the dollar index (DXY) are gaining, while gold (GCZ8) is losing ground. Bitcoin (BTCUSD) is changing hands around $6,300.

See the Market Snapshot column for the latest action.

The quote

“It really made us have a wake-up call: ‘How do we want to live our lives?’” —Federal lobbyist Scott Dacey reflects on the 9/11 attacks, which happened on this day 17 years ago.

Dacey is among the uncounted number of people who moved quietly away from their lives near the hijacked-plane strikes that killed nearly 3,000 people in New York, the Pentagon and a Pennsylvania field, says an AP report. He and his family reside in New Bern, N.C., having left Washington, D.C.

The chart

a close up of a map © Provided by Dow Jones & Company, Inc.

“Don’t concentrate on the exact forecast track of Hurricane Florence,” says the National Hurricane Center on Twitter, as it offers charts like the one shown above.

“Significant effects will extend outside the cone, and will arrive at the coast sooner than the eye.”

See:Carolinas and Virginia brace for Hurricane Florence as 2 more major storms loom

MarketWatch’s Myra Saefong reports that for the U.S. oil market, it’s all about concerns surrounding energy demand, not production, as Hurricane Florence approaches.

The buzz

Helping to keep the focus on the Lehman anniversary, Ben Bernanke, Tim Geithner and Hank Paulson are due to talk about the financial crisis shortly after the opening bell.

A second meeting between President Trump and North Korean leader Kim Jong Un appears to be in the works.

A $6.7 billion deal: Chip maker Integrated Device Technology (IDTI) is getting bought out by Japan’s Renesas Electronics (JP:6723) .

Shares in Sonos (SONO) look set for a big down day after the company’s earnings report late yesterday. But the speaker maker’s stock had rallied into the release, soaring 13% in Monday’s session.

Retailer Francesca’s (FRAN) also is falling hard in premarket action after its earnings ahead of the open, while drive-in restaurant chain Sonic (SONC) is heading the other direction following its results.

Three economic reports are on tap today, with one covering small-business sentiment hit before the open and showed record optimism. Once trading is underway, watch for releases on job openings and wholesale inventories.

Check out: MarketWatch’s Economic Calendar

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