Economics is fortunately almost never a zero-sum game; there can be multiple winners and even in the worst of times there can be players who manage to benefit and grow. Such is the case for this latest recession. While Lehman Brothers, Bear Stearns and hundreds of small banks have disappeared from the landscape (at least as independent entities), others have seen their business or prospects actually improve. (This company survived many financial crises in its long history. Find out what finally drove it to bankruptcy. Check out Case Study: The Collapse of Lehman Brothers.)
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Here is a short list of some the most notable beneficiaries of this recent recession.
Although there were arguably many voices talking about the housing bubble and the large systematic risks that it was creating, two names really rose out of the noise. NYU economics professor Nouriel Roubini has appeared prophetic with his predictions of how the collapsing housing market would ripple through the economy. Likewise, Nassim Taleb, author of the The Black Swan, has seen his work jump into the spotlight with broad acclaim for its discussions of the flaws inherent in risk assessment and prediction.
Given that authors and academics scarcely enjoy anything more than having people praising their theories and writings (to say nothing of more generous publishing contracts for their follow-up work), they clearly have "won" in this recession.
While China did see its growth impacted by the problems in the U.S. economy, the country's government and business leaders did not sit around crying over it. Instead, China extended its hand across the developing world and struck deals across the board for access to minerals, hydrocarbons, timber and other natural resources.
While many American companies were retrenching, cutting headcount and carefully controlling expenses, Chinese companies were aggressively marketing themselves and gaining share at the expense of their larger, but distracted, rivals. With their foot in the door and signed contracts in their briefcases, these Chinese corporations may be difficult to dislodge in the future.
Although Wal-Mart (NYSE:WMT) has actually been an under-performer for the past two years, discounters did seem to get a major boost during the recession as scared or stretched-out shoppers tried to save money while still putting groceries on the table. Family Dollar (NYSE:FDO), Dollar Tree (Nasdaq:DLTR) and Dollar General (NYSE:DG) all enjoyed solid investor interest during the recession, even though the revenue impact is not quite so obvious (though it is certainly worth arguing that these discounters did much better than other retailers on a relative sales basis). Although it is unclear whether American shoppers have permanently embraced a more thrifty approach, perhaps their exposure to these discount retailers softened their opinions a bit and will make them more likely to come back in the future.
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Although banks have slammed the door on would-be borrowers with problematic credit, those who can get loans are benefiting from incredibly low rates. Mortgages are bumping along at or near multi-decade lows and a flood of Treasury bond buyers has led to a very appealing yield curve for corporate and government borrowers. Even software companies, not historically the most active players in corporate debt, have gotten into the game. This flood of easy money could fund an eventual recovery in mergers and acquisitions - a boon perhaps for boutique firms like Lazard (NYSE:LAZ), Greenhill (NYSE:GHL) and Stifel (NYSE:SF).
On quick examination, it would not necessarily be clear that Warren Buffett or Berkshire Hathaway (NYSE:BRK.A) benefited from the recession. After all, Berkshire owns many companies tied to construction/housing, banking and corporate spending, and those businesses have all taken body blows in the recession. Moreover, Buffett's holdings in Moody's (NYSE:MCO) and unconvincing "nobody could have seen this coming" testimony in front of Congress did him no favors.
And yet, Buffett still manages to show why he is Warren Buffett. The recession hurt most stocks, but Burlington Northern was cut nearly in half and it can easily be argued that Buffett picked this company up cheaper as a result. Buffett also seemed to take advantage of the typical fatalism that accompanies recessions and market meltdowns with what will likely be a very lucrative sale of some S&P puts. Moreover, an opportunistic "investment" in Goldman Sachs (NYSE:GS) is paying him $15 a second according to the Wall Street Journal and will clearly work out well for Berkshire Hathaway in the final accounting. (The Oracle of Omaha's "Rip van Winkle" approach has served him well. To learn more, check out Warren Buffett's Best Buys.)
The Bottom Line
Given the magnitude of the fear and chaos during the worst of the credit crunch in 2008, the idea that anybody benefited from it really is testament to the adage that "there's always a bull market somewhere". While most of these entities have had their run and their time in the sun, investors can take away the lesson that opportunism and flexibility really can pay off when things get bad. (Find out where to turn when looking to invest in a tumultuous market. Read Industries That Thrive On Recession.)
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