The Wall Street

Crisis of 2008
Pattern Analysis
Joseph D’Andrea
December 2, 2008

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What is a Pattern?

  A pattern is “ a reliable sample of traits, acts, tendencies, or other observable

characteristics of a person, group, or institution.” (Source: Merriam-Webster)

  Patterns are difficult to predict in any situation.

  In a crisis situation patterns are especially hard to decipher as the mind is overwhelmed
by too much information.

  As time elapses patterns become more clear.

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What Makes Up The 08’ Pattern?
  Warning

  Surprise

  Chaos

  Predictability

  Normalcy

  Recovery

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Warning!
  In the Summer of 2007 the
mortgage crisis is now center
stage as companies such as
Merrill Lynch write down
their losses.

  The Dow Jones after passing

14,000 in early October
begins to decline.

  In December 2007 the media

sounds the alarm of an
upcoming recession.

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Surprise
  On September 15, 2008 just after
midnight investment bank Lehman
Brothers files for bankruptcy.

  It is the largest bankruptcy in

history surpassing Enron.

  The fall of Lehman causes the

spread of fear and panic
worldwide .Creditors race to
recover their money from the
bank.

  Many analyst and financial experts

will conclude in hindsight the
government should have
intervened to save the bank.

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Chaos

  CNBC begins to extend its financial coverage to the

evening to cover the crisis.

  The channel’s afternoon broadcast is occupied by

breaking news on companies are coping with the
crisis.

  Short sellers become a prime target for blame .They

are seen by some as responsible for the fall of Bear
Stearns, Lehman ,and forcing the merger of Merrill
Lynch and Bank of America.

  The Treasury Department’s first request for a 700

Billion bailout package fails to pass in Congress.
Markets are stunned. The Dow falls over 700 points
the same day. The second attempt to pass the bill is
successful.

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Predictability
  The Government steps into
grant Goldman Sachs a
bank charter.

  Citigroup is protected by a
government intervention in
“another weekend, another
bailout” scenarios.

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Normalcy
  Federal Reserve promises
to pump an additional 800
billion into the credit
markets.

  President –Elect Obama

announces new economic
team. A new stimulus
package is promised in
January.

  Black Friday sales up 3%

from previous year.

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Recovery
  Is a major bull market in the
making as many companies
trade 50% below their 52 week
high?

  Do several large mergers take

place as companies begin to use
their cash and tap their credit
lines?

  Will IPO’s return in force with

several social networking
companies leading the charge?

  Would Congress approve

budgetary spending for U.S.
infrastructure projects?

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What Does All This Mean??
  Structured analogies prove useful in understanding parallels.
ie comparisons to the Panic of 1907 and Crash of 1929.
  Pattern analysis provides a complementary use in
understanding the stages an economic crisis takes.
  All situations are unique. The statement “Never seen this in X
amount of years doing this” is useless.
  Characteristics to how people respond to crisis help to
understand at what point we are in a particular one.

  It appears we are between the Normalcy and Recovery stage.

  Thus the Recovery stage is filled with possible exit strategies.

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Contact Information:

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profitablereadings.wordpress.com

Joseph D’Andrea
profitablereadings@gmail.com

(914)-325-1142

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