Friday, January 14, 2011

11 Greatest Trades of All Time

The 11 Greatest Trades of All Time

There have been enormous gains and losses over the last millennium but some of the trades are truly astounding for both their precision, research, conviction, and most importantly the profits that the trades brought in. Since anybody can go ahead and do a top 10 list I decided to do the 11 greatest trades of all time followed by a 11 of the worst trades of all time so be on the look out for that at the end of February.

11) Richard Rainwater and Peak Oil
Rainwater called peak oil at a time when many thought $100.00 crude oil was not possible. Now we know better to doubt him and those who say that the S & P 500 will cross Gold Comex in 2008.....Rainwater put the bets in and even wrote books about it in the late 90's (beyond the limits and limits to growth). In the end King Rainwater took home over a billion dollars come mid 2000's.

10) George Soros Short of the GBP
This trade is all so talked about the British pound short for a billion dollar payday in a single day that I feel I shouldn't have to elaborate on it.

9) John Henry trend following Short on Barrings Bank
Billions of dollars were lost by infamous trader Nick Lesson who ultimately lost Barrings Bank $1.4 billion dollars but playing the trend JWH rode the wave on the opposite side of the Rogue Trader. He also repeated a great trade on the other side of LTCM's collapse.

8) Mark Spitznagel and Nassim Taleeb
The Black Swan trade profiting on volatility on both the financial crisis, tech bust, and of course the Flash Crash. I always laugh when girls come over and see my book the Black swan and say OMG I love the movie the "black swan" to which I politely say oh no it's a different kind of black swan. Perhaps a black swan event for me will be when the girl actually realizes it's not the Natalie Portman film adaptation.

7) Dougie Kass's 666 bottom call
He was live on television on CNBC's Fast Money and said out loud this is it this is "The Bottom" stocks are going up from here "This is a Generational Market Low". Maybe a fluke but a great trade as markets have rallied over 70% since than.

6) John Arnolds Natural Gas Play
For the years he spent at Enron as their best trader and having Ken Lay take the bulk of his pay, he certainly has made up for it with Centaurus Advisors and his 1 Billion dollar payday when he took the other side of declining natural gas plays, took the other side of Amaranth's Blow up trade (this is certainly making the 11 worst trades, sorry Brian Hunter) and a hedge against Royal Dutch Shell before hurricane Katrina.

5) Subprime short by Dr. Michael Burry of Scion Capital
This is perhaps the most known trade of the financial crisis because it was than piggypbacked by Sid Bass, John Paulson, and Jeff Greene. While it's great to see writers who don't know anything about trading and finance list and talk about Paulson as the mastermind of the biggest trade of all time so many seem to leave out a man with aspergers disease who studied everything about the housing market and went to wall street with an idea to purchase credit default swaps to which the banks laughed at first and said please be my guest purchase more....(you can guess who laughed in the end. The Big Short by: Michael Lewis talks about Dr. Burry)

4) Kenneth Griffins
Citadels purchase of the Amaranth portfolio and Sowood Capital. Amaranth Advisors in CT. suffered $6.6 billion in losses on natural gas trades thanks to Brian Hunters bad bets so the brilliant Harvard Statisical Arbitrage fund owner in Chicago studied the books diligently and in short time purchased their trades for pennies on the dollar. Than Sowood ran by Jeff Larson hit some financial problems with his books and yet another home run in short time was hit by the Daytona Beach whiz kid of Chicago.

3) Jim Simmons
Quant realizes that Bernie Maddoffs returns weren't possible statistically and since his guys couldnt do it, it was obvious it wasn't possible. Sometimes the best trades are the ones you stay away from. Credit to also Newport Princeton founder Edward Thorpe who also noticed this years earlier.

2) Target and General Growth Properties Investment by Bill Ackman of Pershing Square Capital. After reading over 110,000 pages of documents according to Fast Money reports Bill Ackman saw the value at pennies on the dollar for a company that had properties worth greater than it's net book value. One of the greatest value investment plays of all time.

1) Homma Munehisa rice trades. As a proprietor of todays candlestick charts he started trading rice with unconventional methods profiting in todays dollars as much as $10 billion dollars a year (that trumps John Paulsons subprime take home and he did it year in and year out)

Note: Certain famous people were left off this list and for good reason. Warren Buffett and Seth Klarman while the greatest two value investors living today is still an investor and not a trader so his plays we're not really trades rather long term value plays if I make a list for the best investments of all time surely his Washington Post and Geico investments would show up. Jesse Livermore perhaps one of the most influential individuals in my trading career had a few astonishingly brilliant trades but yet he died broke when he committed suicide so unfortunately his trades had no longevity.

Honorable Mentions: Have to go to all of the traders that I admire and would love to meet one day. David Einhorns call on the bankruptcy of the 4th largest investment bank a year and 2 months prior.
Jim Chanos short on Enron was as described in Malcolm Gladwells book what the Dog Saw a short that he started looking into once he read an article about their accounting and profits.
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