Top 10 most legendary trades of all time

 

What makes a trade "legendary" isn't just the amount of money made. It's usually a combination of:

• Massive Profit: Often in the billions.

• Contrarian Conviction: The trader went against the entire market.

• Historical Context: The trade is tied to a major economic event.

• Intellectual Brilliance: The analysis behind the trade was groundbreaking.

Here are the top 10, presented in no particular order, as each is a legend in its own right.

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1. George Soros: "The Man Who Broke the Bank of England"

• Trader: George Soros (and his chief strategist, Stanley Druckenmiller)

• Year: 1992

• The Gist: Shorting the British Pound.

• The Legend: In 1992, the UK was part of the European Exchange Rate Mechanism (ERM), which required Britain to maintain a fixed exchange rate against the German Deutsche Mark. Soros believed the British Pound was fundamentally overvalued and that the UK government couldn't sustain the high interest rates needed to prop it up during a recession. He took a massive $10 billion short position against the pound. The Bank of England tried to fight back by buying pounds and raising interest rates, but the selling pressure from Soros's Quantum Fund was too immense. On "Black Wednesday" (September 16, 1992), Britain capitulated and withdrew from the ERM. The pound plummeted, and Soros walked away with an estimated profit of over $1 billion in a single day.

2. John Paulson: "The Greatest Trade Ever"

• Trader: John Paulson

• Year: 2007

• The Gist: Betting against the U.S. subprime mortgage market.

• The Legend: While the housing market was booming, Paulson and his team did the painstaking work of analyzing mortgage-backed securities. They realized the bonds, propped up by risky subprime loans, were destined to fail. Paulson then used a new financial instrument called a credit default swap (CDS) to effectively buy insurance on these bonds, a direct bet that they would collapse. For months, he paid insurance premiums while Wall Street laughed at him. When the housing bubble burst in 2007-2008, his funds skyrocketed in value. The trade netted Paulson's firm around $15 billion, with a personal take of nearly $4 billion. This trade is the centerpiece of the book and film "The Big Short."

3. Jesse Livermore: "The Great Bear of Wall Street"

• Trader: Jesse Livermore

• Year: 1929

• The Gist: Shorting the market before the great crash.

• The Legend: Livermore was a trading prodigy who made and lost several fortunes. His most famous moment came in 1929. While the "Roaring Twenties" saw a speculative frenzy, Livermore's analysis of market dynamics told him the rally was unsustainable. He began building massive short positions. When the market crashed on "Black Tuesday," panic ensued, and nearly everyone was wiped out. Livermore, having bet on the decline, reportedly made $100 million (the equivalent of over $1.7 billion today), cementing his status as a market legend.

4. Paul Tudor Jones: "Predicting Black Monday"

• Trader: Paul Tudor Jones

• Year: 1987

• The Gist: Shorting U.S. stock futures ahead of the 1987 crash.

• The Legend: Using technical analysis and historical chart comparisons, Jones and his analyst Peter Borish saw an eerie similarity between the market of 1987 and that of 1929. Convinced a massive crash was imminent, Jones took aggressive short positions. On October 19, 1987, or "Black Monday," the Dow Jones Industrial Average fell by 22.6% in a single day—the largest one-day percentage drop in history. While the world panicked, Jones's fund posted a 62% gain in October alone, earning him an estimated $100 million.

5. Andy Krieger: "Bigger Than the Country"

• Trader: Andy Krieger

• Year: 1987

• The Gist: Shorting the New Zealand Dollar ("Kiwi").

• The Legend: In the wake of the 1987 crash, investors fled the U.S. dollar for other currencies, which Krieger believed were fundamentally overvalued. He targeted the New Zealand dollar. Working at Bankers Trust, the 32-year-old trader took a short position so large that it was said to have exceeded New Zealand's entire money supply. The Kiwi dollar predictably dropped, and Krieger single-handedly made $300 million for his bank. He was reportedly so underwhelmed by his $3 million bonus that he left to start his own firm.

6. Jim Chanos: "The Sleuth Who Uncovered Enron"

• Trader: Jim Chanos

• Year: 2001

• The Gist: Shorting Enron stock after spotting its accounting fraud.

• The Legend: This trade is legendary for its forensic accounting brilliance. While Enron was a Wall Street darling, Chanos, a famous short-seller, dug into its financial statements. He couldn't understand how Enron was making money and noticed major accounting red flags, particularly its "mark-to-market" accounting. He began shorting the stock in late 2000 when it was trading high. For a year, he held his position as analysts called him crazy. When Enron’s house of cards collapsed into bankruptcy in late 2001, Chanos's clients reaped enormous profits from his conviction.

7. David Tepper: "The Ultimate Contrarian Bet on Banking's Recovery"

• Trader: David Tepper

• Year: 2009

• The Gist: Buying distressed bank stocks at the bottom of the financial crisis.

• The Legend: In early 2009, the financial world was in ruins. Investors believed major banks like Bank of America and Citigroup were insolvent and heading for nationalization (zeroing out shareholders). David Tepper believed the government wouldn't let that happen. He made an enormous bet, buying up common and preferred shares of these banks at rock-bottom prices (Bank of America was under

          $3). When the government confirmed its support and the banks stabilized and recovered, Tepper's fund made about **$
        

  7 billion,** with Tepper himself earning $4 billion.

8. The Hunt Brothers: "The Cautionary Tale of Silver Thursday"

• Trader: Nelson Bunker Hunt and William Herbert Hunt

• Year: 1979-1980

• The Gist: Attempting to corner the global silver market.

• The Legend: This is a story of a legendary trade that failed spectacularly. The oil-rich Hunt brothers believed inflation would make hard assets like silver invaluable. They began accumulating massive amounts of physical silver and silver futures, driving the price from $6 per ounce to nearly $50 in about a year. At their peak, they controlled an estimated one-third of the world's privately owned silver. However, regulators and the exchanges, seeing the manipulation, changed the rules to prevent new long positions. This, combined with the use of massive leverage, caused a wave of selling. The price collapsed on "Silver Thursday" (March 27, 1980), and the Hunts lost over a billion dollars, nearly causing a systemic financial crisis.

9. Stanley Druckenmiller: "Mastering the Dot-Com Bubble"

• Trader: Stanley Druckenmiller

• Year: 1999-2000

• The Gist: Riding the tech bubble up and then shorting it on the way down.

• The Legend: In 1999, Druckenmiller, then managing Soros's Quantum Fund, was heavily invested in "old economy" stocks and was losing money while tech stocks soared. He famously pivoted late in the game, going long on tech stocks and making billions in just a few weeks. But in early 2000, sensing the mania was at its peak, he did another pivot, selling all his tech longs and establishing massive shorts just before the Nasdaq crashed. This incredible flexibility—to ride a bubble and then profit from its collapse—is the mark of a trading genius.

10. Warren Buffett: "The Salad Oil Scandal Bet"

• Trader: Warren Buffett

• Year: 1963

• The Gist: Investing heavily in American Express after its stock crashed.

• The Legend: This trade established Buffett's reputation. A major client of American Express, the Allied Crude Vegetable Oil company, was found to have perpetrated a massive fraud—its giant vats of "salad oil" were mostly seawater. When the fraud was revealed, investors feared American Express would be liable for the losses and dumped the stock, causing it to crash 50%. Buffett, however, did his own on-the-ground research. He went to restaurants and banks, observing that customers and vendors had not lost faith in AmEx's core business: its traveler's checks and credit cards. Convinced the scandal wouldn't sink the company, he invested 40% of his partnership's capital into the stock and made a fortune when it recovered.