Slowly, stocks rebound from Lehman bust

It's been two years to the day since investment house Lehman Bros. failed, unleashing a panic that nearly shattered the global credit system and turned a serious recession into something much worse.

The global economy is starting to recover, spurred on by massive government spending in China and stimulus efforts in the United States and other countries.  But the severity of the downturn -- the worst since the end of World War II -- that the recovery has been frustratingly slow.

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One can argue that allowing Lehman to fail was the worst decision made by then-Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke. Neither has conceded the point, arguing that the government legally couldn't have saved Lehman.

Lately, Bernanke has said that even if the government could have stepped in to prop Lehman up, it was in such deep trouble it would have died anyway.

The short-term financial damage was staggering.

On Sept. 15, 2008, the Dow Jones industrials ($INDU) fell 504 points.  Between Sept. 12, 2008, the Friday before the Lehman collapse, and the March 9, 2009 market bottom, the Dow fell 42.7%, with the Standard & Poor's 500 Index ($INX) off 46% and the Nasdaq Composite Index ($COMPX) off 43.9%.

The Russell 2000 Index ($RUT.X), which tracks smaller stocks, fell 52.3%.

The Dow is still off 8% from the Sept. 12, 2008 close, with the S&P 500 down 10.4% and the Russell 2000 down 9.8%.

The Nasdaq and its sister index, the Nasdaq-100 Index ($NDX.X), which tracks large Nasdaq stocks, have recovered all of their losses since the Lehman collapse. The Nasdaq is up 1.4%; the Nasdaq-100 is up 9.3%.

Most of those gains are due to the huge gains realized by Apple (AAPL), SanDisk (SNDK), Starbucks (SBUX), up 92%, 86% and 175%, respectively, since the Sept. 15, 2008 close.

We asked Howard Silverblatt of Standard & Poor's for the best and worst S&P 500 stock since the Lehman failure. Here's the top 20 winners and losers as of Tuesday's close.

Winners and losers since the 2008 Lehman Bros. collapse
			Tuesday			Chg. Since Lehman
WINNERS
Priceline.com			$334.77			325.54%
Akamai Technologies			$50.70			198.21%
SanDisk corp			$39.51			174.18%
Cognizant Technology			$64.22			158.02%
Ford Motor			$11.98			152.74%
Citrix Systems inc			$67.40			145.27%
Red Hat inc			$38.60			116.49%
Salesforce.com inc			$117.78			114.93%
Netapp			$48.12			106.26%
Whole Foods Market			$35.50			96.13%
Autonation			$23.54			92.16%
Apple			$268.06			90.98%
Amazon.com			$145.75			88.45%
Titanium Metals			$18.72			80.69%
O'reilly Automotive			$51.08			75.17%
Cerner			$79.85			75.07%
Starbucks			$25.78			70.95%
Expedia			$26.84			70.85%
Qwest Communications			$6.01			69.30%
Tellabs			$7.40			67.80%
LOSERS
Bank of America			$13.68			-48.47%
E Trade Financial			$14.26			-49.96%
Supervalu			$11.09			-50.91%
U.S. Steel			$46.83			-51.53%
Janus Capital			$10.40			-52.01%
Gamestop			$18.61			-52.16%
AK Steel			$14.53			-54.34%
Dean Foods			$10.31			-56.07%
Kimco Realty			$15.88			-56.18%
Alcoa			$11.49			-57.33%
Marshall & Ilsley			$7.06			-59.28%
Hartford Financial Services			$23.10			-59.54%
Boston Scientific			$5.33			-59.62%
Electronic Arts			$16.71			-61.42%
American International Group			$36.13			-62.05%
Memc Electronic Materials			$11.04			-64.46%
Weyerhaeuser			$16.09			-70.63%
Prologis			$11.26			-70.75%
Eastman Kodak			$3.85			-71.88%
Citigroup			$3.94			-74.15%

A personal note: In the summer of 2007 -- just as the subprime mortage crisis was erupting -- a colleague asked me if he should buy Lehman Bros. or Bear Stearns, which was taken over by JPMorgan Chase (JPM) in March 2008.

After an evening of research that showed me how deeply both were exposed to the mortgage market, I told him: "Neither. One or both will fail."