10 Years Later, Remembering The Day The Stock Market Hit Bottom

March 9 marks 10 years since the stock market hit bottom. The S&P 500 closed that day at 676, down more than 50 percent in just a couple of years. Morning Edition Host Joe Mathieu spoke with Art Hogan, chief market strategist at National Holdings Corporation, to talk about the rocky ride to where we are today, and the probability of another recession. The transcript below has been edited for clarity.

Joe Mathieu: You're still standing after all that stuff. The S&P 500 is now above 2700. It was below 700. If you dared put money in this market 10 years ago, you would have quadrupled your money.

Art Hogan: Yeah. That's an amazing stat, but it's really hard to imagine someone actually being that bold.

Mathieu: Well, that's right. Do you know anyone who did?

Hogan: I don't. And if they told you they did, they're probably making that story up. But I will tell you this. The interesting thing is over this 10 years, it's been a bumpy road. There have been multiple times where we were close to a 20 percent drawdown. We saw that in 2011 and 2012 when we had the European debt crisis, and Greece was going to float off the map. Then in 2015 when we had both a Chinese currency devaluation and an oil crisis. And just recently, in this last quarter of last year, we were down about 17 percent. It's not as though any of this has been a straight line, but it's certainly in a better place than we were 10 years ago.

Mathieu: Art Hogan, bring us back to 2007 when this all really began. What you must have thought, as somebody who worked in the business, as Lehman Brothers falls off, Bear Stearns collapse, Fannie and Freddie are on the ropes. We thought the whole system was caving — the financial crisis.

Hogan: Yeah. This is as close as any of us will ever see us getting to a point where we're staring into the abyss, and perhaps this is going to break. I remember the weekend when we all went home, and things had been terrible. But there was an assumption over the weekend that someone was going to buy Lehman and take care of the biggest problem. Then somebody bought somebody, but it was Merrill Lynch getting bought by Bank of America.

Mathieu: And who knew that was going to happen?

Hogan: Nobody knew, and we didn't know how impaired Merrill Lynch was because we were talking so much about Lehman Brothers. Bear Stearns had already been taken out. So that was the beginning of the end. That next week, Lehman not getting a bid over the weekend, meant they were going under the waves. That started a real avalanche of bad news, because there were so many counterparty risks, there were so many prime brokerage agreements with hedge funds. Liquidity got locked up, and the money market fund for the first time in history broke the buck. That's when we knew we had massive problems. So that's when the real intervention from the government came. Then Secretary Paulson actually had to go up to Congress, literally on bended knee, begging for assistance so he can start taking out AIG, propping up Fannie Mae and Freddie Mac, and actually starting programs that they had to invent from scratch, like the TARP program. All of that was hundreds of billions of dollars of assistance just to keep the financial system open. And there was no point in time that we weren't looking over our shoulders wondering if we were going to be next.

Mathieu: That your firm might fail?

Hogan: Oh, absolutely. And it's amazing when you get wrapped up in this and it's your everyday life, and you also see your friends that have been working in those prestigious firms for their entire careers get ushered out of their offices and generally out of most of their retirement savings. It was a very scary time.

Mathieu: Well, let me ask you then, as the current administration rolls back some of the regulations that followed the crisis, Dodd-Frank and beyond. Do you think it's more or less likely that this could happen again?

Hogan: Well, it's interesting. Part of the regulation that got rolled back that started this was Glass-Steagall. That just basically meant that investment banks [and] commercial banks were doing some of the same things, and that forced investment banks to create some product that really got us into the mortgage crisis — wrapping up mortgages and selling them as a product and then having derivatives on those just wound up too many mortgages, and too many people had houses. So that's not going to happen again. Now, that type of regulatory front where there [are] some deregulations is happening much more on the regional bank front where it probably should. I think our banking system is much more solid. I'm not concerned about the financial system, necessarily.

Mathieu: So the whole too big to fail thing is not something you worry about at night?

Hogan: No, that's not going to be our issue. I think there [are] plenty of other issues in the marketplace now, but that's not one. I’m much more concerned about the way we go about negotiating trade with China, and hopefully the way we don't go about trying to negotiate trade with Europe. I hope that we don't pivot after a deal with China to tariffs on European autos. There's a much better way to accomplish the things that we want to get done. But that's my chief concern in the marketplace right now.