The Top Ten Trades of All Time

The Top Ten Trades of All Time


What were the greatest trades of all time?

Here is the list of the who, what, when, where, and how of the  greatest trades in the financial markets were made.

While the risk management of executing many of these trades is not what many traders would want, we can see many of these as trend trades and the dangers of fighting the trends becomes apparent along with the profits that can be made by going with the flow with no price target. These trades were not all entered into at one time,  most of  them were built slowly and grew by adding as profits accrued. Most were also watched closely with and eye on the exit button when a true reversal began against these traders. Livermore made many probing shorts that he had to stop out of as the 1929 bull market reversed form breaking down and continued upwards after appearing to roll over. Some of these traders could have been ruined with a little blind sided government intervention that modern day traders are faced with now. But you can not argue with the profits and many of these traders have very long proven records year after year, these were not random trades and they did not just get lucky, most of these were the great play that they landed after decades of research, study, and a life time of waiting for the really fat high probability pitch over the plate that made them go big.

1. John Paulson’s bet against sub-prime mortgages made his hedge fund a cool $15 billion in 2007, that is billion with a ‘B’. he is only one of a very exclusive club that was able to make this call and win with it. Most went short too early and lost money and were stopped out. That most likely was the call of a lifetime that most everyone else was blind to even deep into the crises.

2. Jesse Livermore’s call on the Crash of 1929, Jesse Livermore did not need any computer models, technical indicators, or derivatives to make $100 million dollars ($1.2 billion in today’s dollars) for his own personal account during a time when everyone was bullish and then almost everyone lost their shirts. It was an amazing day when Jesse came home and his wife thought they were ruined and instead he had the second best trading day of anyone in history.

3. John Templeton invested heavily into Japan during  the 1960s, when Japan was beginning its three-decade long economic miracle, Templeton was one of the country’s first outside investors. At one point, he boldly put more than 60 percent of his fund in Japanese assets.

From its founding in 1954, his Templeton Growth Fund grew at an astonishing rate of nearly 16 per cent a year until Templeton’s retirement in 1992, making it the top performing growth fund in the second half of the 20th century.

A $100,000 stake invested in 1954, with distributions reinvested, would have grown to $55 million by 1999.

4. George Soros’ breaking of the bank of England by shorting 10 billion worth of pound sterling and forcing the U.K. to withdraw from the European Exchange Rate Mechanism (ERM)(September 16, 1992). Soros made $1 billion in the process, which was an unimaginable sum back then.

5. Paul Tudor Jones’ shorting of Black Monday. Paul Tudor Jones correctly predicted on his documentary in 1986 based on chart patterns that the market was on the path to a crash of epic proportions. He profited handsomely from the Black Monday crash in the fall of 1987, the largest single-day U.S. stock market decline (by percentage) ever. Jones reportedly tripled his money by shorting futures, making as much as $100 million on that trade as the Dow Jones Industrial Average plunged 22 percent. Another amazing trade to walk away from  with a fortune when so many others were ruined in the aftermath. He played it to perfection.

6. Andrew Hall Back in 2003, when oil was trading at $30 barrel and the economy had just recovered from the dot-com crash, Andrew Hall wagered that prices would top $100 per barrel within five years. When oil prices blew past $100 five years later in 2008, Hall’s employer Citigroup made a bundle and Hall took home $100 million as a part of his compensation for this and other successful trades. He predicted the target price for the trade and the time frame and then structured futures contracts to profit greatly from the move to $100 or they would expire worthless. He did what is suppose to be impossible, predict a price and execute a trade perfectly far in advance for maximum profit.

7. David Tepper’s bought severely depressed shares of big banks early in 2009, Bank of America quadrupled in value and Citigroup tripled in value from their bottoms earlier in the year.  That was good enough to earn Tepper’s hedge fund $7 billion. His personal cut was $4 billion. His bet was that they would be bailed out and not nationalized. He was correct.

8. Jim Chanos’ prescient shorts correctly predicted, and profited enormously, from the demise of Enron. Other examples of his successful shorts include Baldwin-United, Tyco International (NYSE: TYC), Worldcom and recently homebuilders like KB Home (NYSE: KBH)

9. Jim Rogers’ spotted the secular bull market for commodities way back in the 1990s. In 1996, he created the Rogers International Commodity Index. Subsequently, he worked on ways to make that index invest-able. Since 1998, the index has returned 290 percent through the end of 2010. This compares to the 10 percent return of the S&P 500 Index during the same period.

10. Louis Bacon’s made a killing in 1990 by anticipating that Saddam Hussein would invade Kuwait. Bacon went long on oil, short on stocks, and helped his new hedge fund return 86 percent that year. In the following year, he also correctly bet that the U.S. would quickly defeat Iraq and the oil market would recover.

We must all be ready for that once in a lifetime trade. Keep our eyes open. Trade with option contracts or futures contracts to manage risk carefully while leveraging for a possible up side in profits. Letting the right winner run can change a traders life. Do not set a target but instead let the price take us out of the trade. One day we might make that epic trade, the short that falls to $0, the stock that goes up ten times the buy price. Being short the next big stock market crash Do you know how to manage such a trade given the opportunity? If not, it is time to do the homework.

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