By tothetick
The top trades and who made it big.
We all knew it; but somebody has gone and brought us the proof straight from the horse’s mouth. Money makes people lie, cheat, steal and do other immoral ill-doings and now it’s official. The Journal of Organizational Behavior and Human Decision Processes has recently published (May 2013) a report (entitled “Seeing green: Mere exposure to money triggers a business decision frame and unethical outcome”, by Maryam Kouchaki and Kristin Smith-Crowe) in which people will, it turns out (surprise, surprise), double the number of lies that they tell if there is money involved. Yes, that’s right; we double the number of lies, which probably presupposes that we lie anyhow. But just that we lie more when there’s money waiting at the end of it. Pulling the wool over people’s eyes, fibbing, telling white lies; call it what you will. Immoral behavior is heightened when we can smell the greenbacks. People are more likely to flout the rules and go against morals or codes of values in society. When money is involved, people see the world through cost/benefit-ratio specs and the vision of the world changes: it becomes unethical!
Money makes you LIE!
Now, I don’t want people thinking I’m getting accusatory at all. Making money heightens the immoral behavior and the propensity to lie, leading to business models that are immoral. The research has proved it. But, who are the people that have made it rich? Who are the people that have made the greatest trades of all time? Would the research stick where they are concerned or are they exceptions? You decide!
Here are the top trades of all time. The ones that hit the jackpot before the rest of us hit the floor and dived for cover. The ones that struck it rich before gold had been discovered in them there hills. They are in ascending order of the money that was raked in - in bucket loads:
1. $80 million: John Templeton
John Templeton
Sir John Templeton of Templeton Growth Fund-Ltd investment fund. This is the guy that liked a good bet and that financed part of his studies in Law at Oxford University by playing (and winning, obviously) poker. If you had taken the bet on this guy some 50 years ago by investing $10, 000, then it would be worth just under $11 million today. He once said: “To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude… and pays the greatest reward”. He certainly had fortitude and reward!
How did he make $80 million? By shorting internet stocks just before the dot.com bubble bust right in the face of internet. He sold them all and netted a mint and that was before the lock-up for 6 months after the Initial Public Offering came into action stopping the sale of all stocks.
2. $100 million: Jesse Livermore
Jesse Livermore
1929. The Stock Market Crash was the big money-maker for Livermore. But he struck gold way before then.
Livermore shorted stocks in 1906 just before the San-Francisco earthquake. It was just a taste of things to come as he netted $250 thousand. He did the same before the 1907 Panic and that brought him in four times as much. He was only just building up momentum, as he managed to rake in $100 million in 1929 by shorting the 1929 Stock Market Crash. That’s big money. Then it was enormous as people were dropping like dead flies around him. Today, if you take the Consumer Price Index as an indicator, it would be worth a whacking $1.27 billion. If you use the relative share of Gross Domestic Product, then it’s worth even more: $14 billion.
3. $100 million: Paul Tudor Jones
Paul Tudor Jones
This is the guy that netted $100 million by predicting 1987’s Black Monday crash. He shorted as the Dow Jones plunged by over 22%. Paul Tudor’s hedge fund was called Tudor Investments. If you can track down a copy of ‘The Trader’ a documentary released in 1987 (which Tudor bought up all the copies of as soon as they were released), then you might learn a secret or two. Maybe it’s the fact that he had a lucky dinosaur in his office and wore a pair of tennis shoes that he bought at an auction that once belonged to Bruce Willis. He believed the market would rally by at least 30 points when he put them on. The question is raised then: why didn’t he wear them every day?
4. $100 million: Andrew Hall
Andrew Hall
In 2003, Andrew Hall saw oil as a means of striking it rich. The world had just gone through the dot.com crash and was reeling from the sufferings inflicted upon the financial markets. Oil was trading at just $30 a barrel back then. Hard to remember? By today’s standards, it’s impossible to even imagine! From the mid-1980s until about 2003, the price of a barrel of oil traded at roughly $25, in fact. It reached a peak of $147.30 in July 2008.
Hall took a bet that petrol prices would increase by threefold and reach $100 by 2008, due to shortages and petrol reserves declining. There was also heightening tension in the Middle East and speculation to blame. How was he able to predict all of that? Luck? Analysis? Who knows, but he did.
Hall made $100 million on that bet coming off. The bookmakers would have been closing down had he placed the bet down the local bookies. He could even keep the Chinese banks in flush liquidity at the moment, for a few days at least.
5. $300 million: Andy Krieger
Krieger didn’t get it all, he was working for someone else (Bankers Trust), but he still came out of it all with the tidy sum of $3 million, which would allow even the most dispendious amongst us to take retirement. How did he do it? By betting on the fact that the Dollar would plummet and people would end up dumping it big-time. 1987, just after Black Monday, people rushed into other currencies and Krieger took a bet on the New-Zealand Dollar. He struck it rich with the Kiwi and even had so many sell orders that they amounted to more than the money supply of the NZ$! The Dow Jones fell by 22.6% in one day and the Dollar fell against all major currencies around the world. But, Krieger bet on the over-evaluation of the NZ$.
The profits are questionable however, and there is probably a range of between $220 million and $300 million. Bankers Trust stated in 1988 that the fourth quarter profits had been overstated by $80 million.
6. $1 billion: George Soros
George Soros
This is the man that was dubbed the ‘man that broke the Bank of England’. He shorted the pound, borrowed money even to end up making $1 billion. The result was that the UK government had to leave the European Exchange Rate Mechanism because it could no longer continue propping it up artificially and the pound ended up plummeting big-time. He shorted £10-billion worth.
7. $3-4 billion: John Paulson and Kyle Bass
Kyle Bass
John Paulson
When the figures get this high, it seems hard to get the exact sum that was bagged by the guys that shorted the market crashes. John Paulson saw the sub-prime crisis coming and bet on it happening. The financial sector was buying up assets backed by sub-primes that were ready to implode and Paulson wrote credit-default swaps on them. When the market did implode, he just cashed them in.
Kyle Bass did exactly the same and made it rich with about the same amount of money.
8. $7 billion: David Tepper
David Tepper
In the post-meltdown days of the financial crash, David Tepper bought up stock from depressed banks in 2009. There was enormous speculation that the banks risked nationalization, but Tepper took the risk that those stocks would rise again. That paid off. The stocks that he bought in Citigroup and the Bank of America multiplied by three or four times their value and Tepper made a mean $7 billion.
There are plenty more that might be mentioned, but these guys will go down in history as the ones that struck it rich in the end-of-the-world-is-nigh scenarios.
Trillions of dollars get traded every day, but the vast majority of the time, singling out one person is impossible. Rare are the ones that stand up to be counted just before the rest of the people on the trading floor have to pick themselves up and brush themselves down, dust and debris flying through the air around them. How many of them did it ethically? Now that’s the real question, maybe.
Unethical behavior may help you strike it rich. Unethical behavior will probably help you trample on a few people as you clamber to the top. Thankfully, there are some with a few morals left in the business world and trading on the markets. But, I’m sure someone will come up with an example of how they too were unethical at one time and trample on my own deluded ideals. If all else fails anyhow and you can’t stop the lying when the smell of the greenback becomes too strong, cross your fingers behind your back. Who knows, it may work? Or just come clean. People like a good liar that has brash, defiant, so-swagnificent bravado enough to say “yes, and so?”. Fingers crossed!
No comments:
Post a Comment