Who doesn’t love a success story? Fortunately for us, trading has presented endless examples of people getting in and out of the market just at the right time. Today, we’ll explore 5 of the most famous trades of modern times. After that, we’ll fill you in on all the trading events coming up this week.
21st-century trading success stories
1. John Paulson
Often credited for pulling off the “greatest trade ever,” John Paulson made his fortune in 2007 by shorting the real estate market.
Now something of a legend, Paulson foresaw the impending real-estate asset bubble — a vision that led him to pocket a tidy $3.7 billion, while the global economy flatlined.
Today, Paulson is worth roughly $4.2 billion. The bulk of his net worth came from that trade in 2007 — talk about the move of a lifetime!
2. David Tepper
In early 2009, while the world continued to reel from the global financial crisis, David Tepper stepped up and smashed it out of the park.
Using capital from his hedge fund, and with precision timing, Tepper bought up massive amounts of depressed stocks in Citigroup and Bank of America. It was a major risk at the time as there was a belief that these banks would soon be nationalised.
Just a few months later, Citigroup tripled and Bank of America quadrupled in value from the point he’d invested at. Tepper walked off with roughly $7 billion in profit. Nice!
3. Andrew Hall
Back in 2003, when the price of oil was trading at around $30 per barrel, Andrew Hall stuck his neck out to bet that oil would climb to $100 within the next five years. It was a risky move for him and his employer, Citigroup, as Hall had prepared the contracts in such a way that had oil not hit $100 per barrel, they would expire and be worthless.
Fast-forward to 2008 and the price of oil had skyrocketed above $100 million, fortunately for Citigroup and Hall! The company made a fortune and he personally made $100 million.
4. Bill Ackman
Back in February 2020, Pershing Square hedge-fund manager Bill Ackman had a feeling that the pandemic would have a greater impact on the stock market than investors were pricing in. He put his money where his mouth was and bet that the bubble would burst and started setting up a hedge fund worth $27 million.
The virus proceeded to spread, global markets went through the floor and, just a month after taking his position, Ackman strolled into the sunset with $2.6 billion burning a hole in his back pocket.
5. Kyle Bass
Have you ever watched the film The Big Short? If not, we totally recommend it. While not about him, the real winner of that story was Kyle Bass. Similar to John Paulson, Bass made his most epic trade during the subprime mortgage crisis.
In trading, there’s no such thing as too much information, and Kyle Bass is probably the greatest beneficiary of that fact. Back in 2007, he hired a team of investigators to measure every inch of the mortgage process to see how easy it was to get one with ridiculously poor conditions. His findings showed just how unstable the market was. He bet against the market, shorting mortgage-backed securities.
All-in-all, Bass made $500 million by essentially working out how easy it was to fill out a piece of paper. Which is pretty cool.
What’s on the trading agenda this week?
Fancy emulating one of these guys? Who knows, this week might just present an opportunity to do so. Here are all of the events you need to watch out for:
Monday 3rd May
● USD — Markit Manufacturing PMI Final (APR); ISM Manufacturing PMI (APR)
Tuesday 4th May
● AUD — RBA Interest Rate Decision
● CAD — Balance of Trade (MAR)
Wednesday 5th May
● NZD — Employment Change QoQ (Q1); Unemployment Rate (Q1)
Thursday 6th May
● GBP — BoE Interest Rate Decision
Friday 7th May
● AUD — RBA Statement on Monetary Policy
● CAD — Employment Change (APR); Unemployment Rate (APR)
● USD — Non-Farm Payrolls (APR); Unemployment Rate (APR)
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The Contentworks team