While all investors must trade, a "trader" by profession does not technically make investments. According to Benjamin Graham, a founding father of the value inve🐈sting movement, an investment must promise "safety of principal and an adequate return." Investors make informed decisions after car🍰eful analysis of the business fundamentals of a company.

Traders, on the other hand, use 澳洲幸运5官方开奖结果体彩网:technical analysis to place bets engineered to profit on short-term 澳洲幸运5官方开奖结果体彩网:market volatility.

In the early 2000s, it was not uncommon for people to quit their jobs, empty their 澳洲幸运5官方开奖结果体彩网:401(k) plans and actively trade for a living from the comfort of their homes. Fueled by massive 澳洲幸运5官方开奖结果体彩网:stock market and 🤪real estate bubbles, it was hard to lose money. However, this golden ag🍸e has come and gone.

The year 2007 brought with it a 澳洲幸运5官方开奖结果体彩网:global recession and subsequent proliferation of financial regulation. 澳洲幸运5官方开奖结果体彩网:High-frequency trading, carried out by computers running incredibly complex 澳洲幸运5官方开奖结果体彩网:algorithms, now account for about 50% of volume on any given day of trading.

Traders frequently lose large chunks of money over the course of a single day of trading, hoping that their gains will offset their losses over time. They must also overcome significantly higher 澳洲幸运5官方开奖结果体彩网:transaction costs and competition with super-computers. While the cards are stac꧋ked against traders in general, there are a handful of traders with enough brains, boldness, and capital to take on the odds.

1. Paul Tudor Jones (1954–Present)

The founder of Tudor Investment Corporation, a $11.2 billion hedge fund, Paul Tudor Jones made his fortune shorting the 1987 stock market crash. Jones was able to predict the multiplying effect that 澳洲幸运5官方开奖结果体彩网:portfolio insurance would have on a 澳洲幸运5官方开奖结果体彩网:bear market.

Portfolio insurance, a popular 澳洲幸运5官方开奖结果体彩网:risk management tool, involves buying index puts to lower one's portfolio risk. Thus, in a bear market, more and more investors will choose to employ their 澳洲幸运5官方开奖结果体彩网:put options and drive the market down even further.

Jones' bet paid off big: on 澳洲幸运5官方开奖结果体彩网:Black Monday of 1987, he was able to triple his capital from his short positions. As of May 2022, Jones is worth roughly $7.3 billion and is currently 澳洲幸运5官方开奖结果体彩网:managing his hedge fund.

2. George Soros (1930-Present)

澳洲幸运5官方开奖结果体彩网:George Soros is arguably the most well-known trader in the history of the business, known as "澳洲幸运5官方开奖结果体彩网:The Man Who Broke the Bank of🥃 England." In 1992, Soros made roughly $1 billion in a bet that the British pound would depreciate in value. At the time, the pound had been introduced into the European ERM rate—an 澳洲幸运5官方开奖结果体彩网:exchange rate mechanism designed to keep its listed currencies within a set of defined parameters to increase systemic financial stability.

With the help of his associates at his hedge fund, the Quantum Investment Fund, Soros noticed that the pound was not fundamentally strong enough to stay in the ERM, and built up a 澳洲幸运5官方开奖结果体彩网:short position to the tune of $10 billion. As of May 2022, Soros is worth approximately $8.5 billion and is retired.

3. John Paulson (1955-Present)

Praised by some for executing the "greatest trade ever," John Paulson made his fortune in 2007 by shorting the real estate market by way of the collateralized-debt obligation market.

Paulson founded Paulson & Co. in 1994 and was relatively unknown on 澳洲幸运5官方开奖结果体彩网:Wall Street—that is, up to the 澳洲幸运5官方开奖结果体彩网:financial crisis that began in 2007. Foreseeing the asset bubble in real estate, Paulson's funds made a reported $15 billion in 2007, while Paulson himself pocketed a tidy $3.7 billion. For profiting stupendously while the global economy staggered, Paulson came under the intense scrutiny of the U.S. federal government during this time.

As of January 2022, Paulson is worth roughly $4 billion.

The Bottom Line

Jones, Soros, and Paulson all have one thing in common: their most 澳洲幸运5官方开奖结果体彩网:lucrative trades were highly leveraged shorts. The 澳洲幸运5官方开奖结果体彩网:conflict of interest is clear. Traders have every incentive to profit off of an imbalanced 澳洲幸运5官方开奖结果体彩网:financial market, often at the expenℱse of every other market player.

Furthermore, their actions tend to prolong and exacerbate the initial financial imbalance, sometimes to the point of complete and total 澳洲幸运5官方开奖结果体彩网:market failure. Should they have this capability? Well, that's for legislatures t🐓o decide.