Cavanaugh Capital Management Specializing in Active Fixed Income and Passive Equity Strategies

The 2000s - The Times That Tried Investors' Souls
December 31, 2009
By: Taylor Graff, Senior Associate

It is difficult to remember that the past decade began with unparalleled optimism. Globalization, increased productivity from technology and capable monetary policymakers had combined to create the “Great Moderation” in economic volatility. For nearly 20 years, interest rates were falling, inflation was moderating, the dollar was steady and the U.S. economy and stock market had experienced tremendously consistent growth. Financial markets were boring, pleasantly boring. Unfortunately, the boredom did not carry over into the new century. Virtually every corner of financial markets experienced a decade full of surprises – from all-time highs in commodities to all-time lows in interest rates; from crashes of real estate and tech stocks to booms in India and Brazil.

S&P 500: 2000-2009

So with this historic decade over, CCM takes a look back at the six biggest stories in financial markets over the last ten years:

Story #1 – Financial Crisis Rocks Wall Street

Story #2 – Technology Bubble Bursts

Story #3 – Stock Market Pain

Story #4 – Oil’s Wild Ride

Story #5 – Rise of BRIC

Story #6 – September 11, 2001

Chart: Winners and Losers from the 2000's

 

 

Timeline of Events

2000
10-Jan AOL acquires Time Warner
10-Mar Nasdaq peaks at 5,132 marketing the height of the Tech Bubble
3-Apr Microsoft declared a monopoly in Federal Court
18-May Boo.com declares bankruptcy
6-Nov Pets.com declares bankruptcy
7-Nov Voters go to the polls in the historically close election of 2000
12-Dec Supreme Court rules in Bush v. Gore, resulting in Bush's victory
2001
3-Jan Federal Reserve unexpectedly cuts key interest rates for the first time since 1998
31-Mar 1Q GDP report shows first decline in GDP since 1991
11-Sep Terrorist attacks cause financial market freefall
7-Oct U.S. led forces invade Afghanistan
22-Oct Enron acknowledges SEC investigation into its accounting practices
15-Nov Oil falls to $17.45 a barrel, the low point for the decade
2-Dec Enron declares bankruptcy
2002
3-Jun Dennis Kozlowski resigns as CEO of Tyco amidst a tax and accounting scandal
26-Jun SEC launches investigation into WorldCom's accounting practices
12-Jul WorldCom declares bankruptcy
10-Oct S&P 500 bottoms at 768.63, 51% below its all-time high set in 2000
2003
20-Mar U.S. Led forces invade Iraq
2004
30-Jun Federal Reserve raise key interest rate
1-Oct Oil officially closes above $50/barrel
2-Nov President George W. Bush wins reelection, defeating Senator John Kerry
2005
29-Aug Hurricane Katrina makes landfall; oil and gasoline prices skyrocket
17-Oct Refco declares bankruptcy
2006
1-Feb Ben Bernanke takes over as Chairman of the Federal Reserve
2007
27-Feb Dow Jones Industrial Average drops 400 points (largest drop since 9/11/2001) after HSBC announces significant write-downs on its sub-prime mortgage holdings
2-Apr Sub-prime mortgage giant, New Century, files for bankruptcy
16-Jul Bear Sterns announces that two sub-prime mortgage hedge funds had collapsed
10-Aug Central banks around the world inject liquidity in response to the financial crisis
16-Aug Countrywide takes out an emergency $11 billion loan
11-Oct S&P 500 peaks at 1,576.09
7-Nov New York District Attorney, Andrew Cuomo, announces investigation into Washington Mutual's practices
2008
3-Jan Crude oil trades above $100/barrel for the first time
11-Jan Bank of America purchases Countrywide Financial
7-Feb Auction Rate Security (ARS) crisis begins
16-Mar Bear Sterns is purchased by J.P. Morgan in a deal orchestrated by the Federal Reserve to avoid Bear's bankruptcy
11-Jul IndyMac is seized by the FDIC
7-Sep Fannie Mae and Freddie Mac are placed in conservatorship by the Federal Government
14-Sep Bank of America purchases a distressed Merrill Lynch
15-Sep Lehman Brothers declares bankruptcy
17-Sep Federal Reserve lends AIG $85 billion to avoid bankruptcy
25-Sep Washington Mutual is seized by FDIC
29-Sep Dow Jones Industrial Average drop 777 points, the largest decline in its history as the House votes down the Economic Stabilization Act
3-Oct Wells Fargo and distressed Wachovia announce a merger
3-Oct House passes Economic Stabilization Act and President Bush signs it into law
9-Oct Icelandic banking system and currency collapses
13-Oct Royal Bank of Scotland (RBS), HBOS, and Lloyds are rescued by British government
14-Oct

U.S. Treasury uses TARP to purchase equity in nine of the nation's largest banks
4-Nov Senator Barack Obama is elected President of the United States, defeating Senator John McCain and becoming the nation's first African-American President
23-Nov Citigroup receives an additional $20 billion from U.S. Treasury
11-Dec FBI arrests Bernie Madoff for an alleged $50 billion ponzi scheme
19-Dec President Bush announces that U.S. Treasury will provide a bridge-loan to GM and Chrysler
2009
16-Jan Bank of America receives an additional $20 billion from U.S. Treasury
17-Feb President Obama signs 2009 Stimulus Bill
9-Mar S&P 500 bottoms at 666.79, a 12-year low and 58% below its 2007 peak, the largest drop since the Great Depression
30-Apr Chrysler files for bankruptcy and announces alliance with Fiat
7-May Federal Reserve releases the findings of its "stress tests" on bank capital showing better than expected results
1-Jun GM files for bankruptcy
10-Jun U.S. Treasury accepts first repayments from 10 banks in the TARP program
1-Nov CIT group declares bankruptcy
25-Nov Dubai World announces need to restructure debt or risk default
31-Dec S&P 500 finishes 2009 with a 23.5% gain, up 71.8% from the March low
A Balanced Approach for Long-term Investors

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