It is worth reading much of this
thread on banking stocks from 2007.
Nice. I enjoy re-reading threads like that every few months to remind myself how those extraordinary times felt. The posts from "VaCollector" are gut-wrenching, especially
Adios.... That, and the
epic thread over at Bogleheads following "market timer," should be required reading for investors.
For what it's worth, here's some stuff that I remember:
1. In 2004, as a high school student, I wondered how anyone from my generation would ever be able to afford a house. I also remember telling an adult that I wanted to get into real-estate somehow to make money. I guess I was almost like the "shoe-shine boy" giving stock tips.
2. In 2006-2007, I read several scary articles about how the economy was artificially propped up by the "finance, insurance, and real-estate" (FIRE) industry.
3. I took a college personal finance class in early 2008, and there was a lot of heated discussion over whether or not we were entering a recession. Our instructor was still telling us about how he flipped houses.
4. A college classmate lined up a job with Bear Stearns for after graduation, and then they collapsed two weeks later.
5. This American Life and Planet Money did their now-famous episode called
"Giant Pool of Money" in May 2008. I didn't catch it until early 2009.
6. Few people mention it anymore, but don't forget the bubble in oil prices that appeared at the same time. I remember, in the summer of 2008, doing the math and seeing that a gallon of gas would be $100 pretty soon if the trend continued. The stock market seemed to have a perfect inverse correlation with oil prices. I thought the market would recover once the oil bubble finally popped. Then the oil bubble popped and stocks kept falling.
7. As things happened quickly in September, what stands out in my memory is news of the
"TED spread" reaching some historically astronomical figure, although I didn't really understand.
8. In October, after the sharp 30% drop in the S&P 500, I called bottom and maxed out the remaining space in my IRA for 2008. As soon as markets opened in January 2009, I did it again. Then the indices continued to fall. I felt like I knew nothing, and it all started to seem comical.
EDIT: To be clear, I didn't predict anything. None of this stuff led me to believe there would be a big crash. For everyone predicting something bad, there were plenty of optimists and nay-sayers, myself included oftentimes.
Tim