Doing business means taking calculated risks.
Regardless of whether you are opening a lemonade stand or you’re a leading executive at a Fortune 500 company, risk is an inevitable part of the game.
Taking bigger risks can generate proportional rewards – and sometimes, such as for the companies you’ll read about below, the risk-taking backfired to queue up some of the biggest bankruptcies in U.S. history.
Going For Broke
Today’s infographic comes to us from TitleMax, and it highlights the 20 biggest bankruptcies in the country’s history.
Companies below are sorted by total assets at the time of bankruptcy.
There are times when companies are forced to push in all of their chips to make a game-changing bet. Sometimes this pans out, and sometimes the plan fails miserably.
In other situations, companies were actually unaware they were “all-in”. Instead, the potentially destructive nature of the risk was not even on the radar, only to be later triggered through a global crisis or unanticipated “Black Swan” events.
The Biggest Bankruptcies in the U.S.
Here are the 20 biggest bankruptcies in U.S. history, and what triggered them:
|Rank||Company||Year||Assets at Bankruptcy||Downfall|
|#1||Lehman Brothers||2008||$691 billion||2008 financial crisis|
|#2||Washington Mutual||2008||$328 billion||2008 financial crisis|
|#3||Worldcom Inc.||2002||$104 billion||Accounting scandal|
|#4||GM||2009||$82 billion||Massive debt|
|#5||CIT Group||2009||$71 billion||Credit crunch|
|#6||Pacific Gas & Electric||2019||$71 billion||Wildfires|
|#8||Conseco||2002||$61 billion||Failed acquisition strategy|
|#9||MF Global||2011||$41 billion||European sovereign bonds|
|#10||Chrysler||2009||$39 billion||Massive debt|
|#11||Thornburg Mortgage||2009||$37 billion||Declining mortgage values|
|#12||Pacific Gas & Electric||2001||$36 billion||Drought|
|#13||Texaco||1987||$35 billion||Contract dispute|
|#14||FCOA||1988||$34 billion||Savings and loan crisis|
|#15||Refco||2005||$33 billion||Accounting fraud|
|#16||IndyMac Bancorp||2008||$33 billion||Mortgage market collapse|
|#17||Global Crossing||2002||$30 billion||Plummeting world economy|
|#18||Bank of New England||1991||$30 billion||Bad loans|
|#19||General Growth Properties||2009||$30 billion||Failed acquisition strategy|
|#20||Lyondell Chemical||2009||$27 billion||Decline in demand|
The data set on the biggest bankruptcies is organized by assets at time of bankruptcy. Therefore, they are not in inflation-adjusted terms, meaning the list skews towards more recent events.
This makes the impact of the 2008 financial crisis particularly easy to spot.
The events and consequences relating to the crisis (loan defaults, illiquidity, and declining asset values) were enough to take down banks like Lehman Brothers and WaMu. The after effects – including a slumping global economy – led to a second wave of bankruptcies for companies such as GM and Chrysler.
In total, nine of the 20 biggest bankruptcies on the list occurred in the 2008-2009 span.
A Dubious Distinction
You may also notice that one company was on the list twice, and this was not an accident.
Pacific Gas & Electric, a California company that is the nation’s largest utility provider, has the dubious distinction of going bankrupt twice in the last 20 years. The first time, in 2001, resulted from a drought that limited hydro electricity generation, forcing the company to import electricity from outside sources at exorbitant prices.
The more recent instance happened earlier this year. Facing tens of billions of dollars in liabilities from raging wildfires in California, the utility filed for Chapter 11 protection yet another time.
The Top Google Searches Related to Investing in 2022
What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.
The Top Google Searches Related to Investing in 2022
It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most?
This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.
Top Google Searches: Year in Review
We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.
|Month of Peak Interest||Search Term|
|February||Russian Stock Market|
|December||Interest Rate Forecast|
Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.
Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.
The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.
|Date||Closing Price of WTI Crude Oil
|January 2, 2022||$76|
|March 3, 2022||$125|
|December 29, 2022||$80|
While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.
The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.
|Index||Price Return in 2022|
|S&P 500 Value Index||-7.4%|
|S&P 500 Growth Index||-30.1%|
Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.
The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.
|Currency||USD Appreciation Against Currency
(Dec 31 2020-Sep 30 2022)
Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.
The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.
The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.
The Top Google Searches to Come
After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?
Find out how New York Life Investments can help you make sense of market trends.
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