6 Bold Trades That Paid Off

Many traders are risk-averse – and that’s not a bad thing. It important to know exactly what you’re investing in, and to take the time to maximise your chances of success. However, sometimes it may pay to be bold – as long as you understand the risks and rewards, taking calculated bets may pay off big time. You only have to look back in history at some of the most eye-popping trades to see this in action.

John Templeton’s bet on Japan

You’ve probably heard of Templeton Funds, and John Templeton was the man behind them. Back in the 1960s, as Japan’s economy started to skyrocket, Templeton bet big on the economic miracle. In fact, at one point, more than 60% of his investments were in Japan. Needless to say, he made a killing – the rewards of being a true pioneer.

Shorting Black Monday

Back in 1987, huge numbers of investors lost their shirts as the markets collapsed on Black Monday – when the Dow Jones Industrial Average fell 22% in a day. Many traders felt uneasy before the event, but Paul Tudor Jones saw an opportunity. He shorted the market, and then racked up profits of $100 million when everyone else was losing their head.

Jim Chanos and Enron

At the time of its demise, Enron was one of the biggest scandals in financial history. However, for one investor, the company’s bankruptcy wasn’t a surprise. As far back as the beginning of 2000, Jim Chanos started to dig into Enron, and found major red flags. He took a big short position, alerted the media to the discrepancies, and – in short – became rich when the scandal went public in October 2001.

Bringing home the bacon

Back in 1990, Lewis Bacon took a long position in oil and went short on stocks. Why? Because he accurately predicted that Saddam Hussein would invade Kuwait. He was one of the few investors who has correctly predicted a geopolitical event, and largely based on his analysis of the financial difficulties that the Iraqi government faced. As a result, his hedge fund managed to rack up an 86% return in 1990.

The man who broke the Bank of England

Not many people had heard of hedge funds in 1992, but George Soros quickly put the industry on the map. He rightly judged – along with Stanley Druckenmiller – that if he shorted the pound, the Bank of England did not have enough reserves to withstand the pressure, and would be forced to exit the European Exchange Rate Mechanism. He was right, and his short position gave him a profit of $1 billion.

Betting on oil

Oil prices may be below $50 a barrel today, but it hasn’t always been that way. Back in 2003, oil was trading at $30, but Andrew Hall believed oil had a huge upside. He made a long-term bet that oil would rise above $100 within five years, and he was right. In 2008, oil hit $100 a barrel and kept rising. Hall made a bundle for his employer, Citigroup, and took home $100 million for himself.

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