The world of trading has witnessed some of the greatest escalations in history, where people have made vast amounts over the years.
Trading in stocks and securities is a tricky job and thus needs proper expertise to execute and proliferate your profits. However, these famous traders were sure to adhere to all the necessary protocols that helped them attain success.
Top 5 Best Trades Ever Made
Here is a list of the five best trades made by some of the excellent traders across the world that even altered the way people trade these days –
1. Betting on the Beleaguered Banks – David Tepper
David Tepper commenced his financial career holding an MBA and a treasury position at Republic Steel. Goldman Sachs hired him in 1985 as a credit analyst, and within six months, he was the head trader on the high-yield desk.
He began trading independently in 1993 after leaving Goldman in 1992 and established his fund. Tepper’s fund initially portrayed volatility and yet managed to yield an average of 30%.
Tepper glanced at the bigger picture and decided to move his fund into banking. Tepper studied a government white paper released in February 2009, that announced its Financial Stability Plan, designed to shore up the banks.
Tepper invested in some of the largest banks’ common stocks at diminutive values in large numbers.
Tepper’s firm then purchased Citigroup shares at a mere 19 cents to the dollar and Bank of America at 12 cents to the dollar, furthermore roughly $1 billion worth of AIG’s commercial mortgage securities at 9 cents to the dollar.
In 2009, he waited for them to quadruple throughout the entire year. As Appaloosa returned 132.7% by the year’s end, Tepper made a staggering $7 billion.
2. The Real Winner of The Big Short – John Paulson
Paulson was one of the famous winners from the ‘The Big Short’.
He established his own hedge fund under the name of Paulson & Co with $2million in 1994 and proliferated it to around $100 million by the middle of the decade.
Eventually, he and his analyst, Paulo Pellegrini dug into the US Housing market. Paulson managed to gather $150 million and then insisted the banks sell him a chunk of Credit Default Swaps, all of which are insurance against debt.
By the end of 2007, Paulson & Co had raked in $15 billion, and as the markets continued to collapse, Paulson earned another $5 billion for the fund and estimates put his take at a whopping $4 billion.
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3. ‘Shark Tank’ Trades – Mark Cuban
Mark Cuban has made some of the most fruitful ‘Shark Tank’ investments that include –
- Tower Paddle Boards
Cuban invested $150,000 for a 30 per cent stake in the startup of standup paddle boards in 2012.
The Shark Tank appearance generated a quick $60,000 of orders, and when Cuban heard about this, he asked for a $50,000 dividend check.
Back in 2013, when the company failed to gather financing, Cuban provided a critical $300,000 loan.
- Nuts ‘N More
Nuts ‘N More produces nut butter and other products that are rich in protein and contain flaxseed.
In 2013 Cuban and fellow Shark Robert Herjavec teamed up to invest $250,000 for a 35 per cent share of the company.
This investment turned out to be a lucrative bet. As of 2018, the company had a whopping $30 million in total sales.
- Gameday Couture
Gameday Couture has partnered with NBA and NCAA teams to produce clothing with team logos, providing fashionable touches.
Cuban invested $100,000 in 2014 for a 30 per cent share hold in the company, on the condition that It had to design apparel for his team, the Dallas Mavericks.
Gameday Couture then witnessed a total sales of $20 million towards the end of 2018, with $12 million for 2018 itself.
- Simple Sugars
Lani Lazzari pitched her skincare line on Shark Tank while being only 19 back in 2013.
Cuban invested $100,000 for 33 per cent of the company’s stake. Simple Sugars had about $2 million in sales in 2017 and anticipated a net $5 million in annual sales within the coming years.
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4. Another Real Winner of The Big Short – Kyle Bass
Kyle Bass is one of the biggest winners of the Credit Default Swap trades that happened in 2007. Bass rose quickly to the Managing Director at the age of 28 at Bear Sterns.
He then began his firm, Hayman Capital Management LP back in 2006 with $5 million of his capital and $28 million from investors.
He had a conversation with a famous investment Banker from New York about the Subprime CDO market, that led Bass to hire a team of private investigators to research the US mortgage market.
He then began purchasing CDSes primarily as a bet against the multi-trillion-dollar Subprime mortgage market. Bass gathered more and more investors and achieved a $4 billion profit for his hedge fund.
5. $1 Billion Bet Against the Pound – George Soros
Being a part of the European Exchange Rate Mechanism (ERM), the Pound was forced to remain within 6% against other currencies within this system.
The Bank of England’s hope that the ERM would mitigate inflation was perceived as a misapprehension by George Soros as-well-as his Quantum Fund.
Soros quickly borrowed heavily to short the Pound. He soon took up a position that crossed $4 billion in total against the Pound, the Bank of England raised their interest rates to 12%.
The bank turned down the idea to later raise rates to 15% and exited the ERM, thereby conceding defeat.
Soros had pulled off a genuinely remarkable trade and conveniently walked away with $1 billion due to his efforts, later being known as the man who ‘broke the Bank of England’.
The domain of trading has the potential of billions of dollars if executed correctly. Considering all the trades mentioned above, it has been clear to not always follow the herd and think outside the box.
The most celebrated names in the history of trade have undertaken some severe steps to win vast sums of money, and have executed their trade shares intellectually.
It is advisable to follow these successful traders’ ideologies and be creative while investing your money in the market.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.