The Greatest Trades in History
Going back in time, the most extraordinary successes in trading history took place because financial markets pioneers took meticulously calculated risks.
Jesse Livermore - 1929
Probably the best short-seller in the history of the US stock market, Jesse Livermore was a maverick of his time who traded solo having devised his own proprietary system. During the Panic of 1907, when the New York Stock Exchange fell almost by 50% compared to the previous year, he predicted that an abrupt fall in prices would lead traders to sell so he sold the market short. The $3 million dollars he collected from this trade was only the beginning of his financial markets journey.
When in 1929, Livermore recognized similar conditions to those of 1907 he started selling stocks and built a large short position. Being right in his analysis once again, he pocketed $100 million from the Wall Street Crash – an amount which would render him a multi-time billionaire in today’s economy.
George Soros - 1992
Dubbed as “the man who broke the Bank of England”, George Soros – a hedge fund manager- rose to international stardom in 1992 when he amassed a profit of $1 billion from trading the financial markets.
Up until the 1990s, the British pound shadowed the German mark which led to low rates and high inflation for Britain. Soros considered this an unsustainable situation and believed that fixed exchange rates could no longer withstand market forces.
As a measure to defend the British pound, Britain raised rates and Soros started short selling the currency. Realizing that they were wasting billions, the British government left the European Exchange Rate Mechanism and on Black Wednesday, 16 September 1992, the pound collapsed. Soros closed his short positions and got richer by $1 billion on this deal.
John Paulson - 2007
John Paulson is an American hedge fund manager and one of the traders who made a staggeringly large fortune in Wall Street. In 2007, he shorted the real estate bubble.
Paulson was among the small number of traders who foresaw the 2007 subprime crisis. His fund purchased credit default swaps on securitized mortgage debt during the peak of the housing boom. When the subprime crisis occurred, their value sky-rocketed and Paulson personally cashed in $4 billion of his fund’s take – an amount which landed him on the list of the wealthiest people in the world.
David Tepper - 2009
Traders capitalized the subprime mortgage crisis of 2007 by placing short trades before the disaster and betting on the recovery. David Tepper might not have been one of them, but he was busy studying the next trading opportunity and planning how he would benefit from it.
In 2009, with the threat of nationalization casting a shadow over America’s most important banks Tepper bought a great number of depressed bank stocks. Within a few months, the value of his holdings soared with his hedge fund netting $7 billion and him personally cashing in $4 billion.
What remains to see now is who the next traders who will outmatch these famous magnates are going to be.