Over the last 20 years, the U.S. national debt has skyrocketed, creating ripples that affect every corner of American life. In the year 2000, the debt stood at roughly $5.6 trillion. Fast forward to today, and it’s soared beyond $34 trillion, with the latest $1 trillion increase occurring in approximately 100 days!
As housing markets crumbled and banks faltered, some investors anticipated the downfall and profited by short selling. They bet against the market, expecting prices to fall, which they did dramatically.
During the crisis, asset prices plummeted. Sharp-eyed investors acquired high-quality assets at significantly reduced prices. When the market eventually recovered, these assets regained their value, yielding substantial returns.
Smart investors diversified their portfolios to mitigate risks. They invested in gold, government bonds, and other safe-haven assets that typically hold or increase in value during market downturns.
* These are examples and not an investment advice
Strategy: Foresaw the subprime mortgage crisis and bet against mortgage-backed securities by investing in credit default swaps
Gain: Over $15 billion profit
Strategy: Purchased preferred shares in distressed but fundamentally strong companies like Goldman Sachs and General Electric
Gain: Earned billions in dividends and capital gains as markets stabilized
Strategy: Recognized early signs of economic recovery and invested heavily in equities and currencies that would benefit
Gain: Gained approximately $1.1 billion in 2009 alone
Strategy: Leveraged quantitative models to exploit market inefficiencies during the crisis
Gain: His fund, Renaissance Technologies, reportedly returned more than 80% in 2008, benefiting from the high volatility of the market
Strategy: Bought distressed stocks, especially in the banking sector, when markets were at their lowest
Gain: His fund, Appaloosa Management, gained about $7 billion by betting on banks and other financial stocks to rebound after the crash
Strategy: One of the first investors to recognize and profit from the impending subprime mortgage crisis, using credit default swaps to bet against the housing market
Gain: His accurate predictions and investments brought in over $700 million for his fund, Scion Capital, and personal profits of $100 million
Back in 2008, a bunch of outsiders looked into the financial market and found that it was holding on to a great lie. Sounds familiar, doesn’t it? So what they did was play against the market!
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