What You Would Have Made If You'd Bought Big Lenders In 2006

Lending money is a risky business. Lending money when the lender is itself highly leveraged is more risky yet. How bad can the result of this simple fact be for investors in common stock? And have such investors yet recovered from the crisis of 2007-2009?

Suppose you had decided at the end of 2006, when it looked like lending businesses were booming, to invest $10,000 equally divided among the common stock of the dozen biggest U.S. lending institutions. Those would have been eight bank holding companies, two thrift holding companies and two government-sponsored enterprises. Specifically, ranked by total assets, that would have been: Citigroup, Bank of America, JPMorgan, Fannie Mae, Freddie Mac, Wachovia, Well Fargo, Washington Mutual, U.S. Bancorp, Countrywide Financial, SunTrust and National City.