Many profited from the recovery, but few from the crash. Did you?
Markets do crazy things. Economies do funny things. People do stupid things. The majority of investors learned this the hard way over the past two years.
A few others, however, saw it all coming, and made ungodly fortunes as global economies erupted from stupidity overload. Here are seven of them, all from the US. There are undoubtedly some from the UK, and if you know of any, including yourself, let us know in the comment area at the foot of this article.
Andrew Lahde
Few have ever heard of Andrew Lahde. Those who have mostly know him for a letter he wrote to his hedge fund investors last autumn, colourfully describing why he was quitting after making 870% in 2007 (and probably a good deal more in 2008) by shorting the subprime market. In Lahde's own words:
"I will no longer manage money for other people or institutions. I have enough of my own wealth to manage ... I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two-week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voice mails within normal time frames or at all."
Amen, brother.
Roy Niederhoffer
Roy's hedge fund scored a gain of 54% in his short-biased fund, and 19% in a long-biased fund, during 2008.
Don't expect victory dances anytime soon. According to The New York Times, he's actually banned fist-pumping in the office in an attempt to preserve humility.
Hank Paulson
When the former Goldman Sachs CEO became Treasury Secretary in 2006, Paulson had to sell his $500 million stake in the Wall Street bank to avoid a conflict of interest. (Tell that to the conspiracy theorists.)
As the US law permits for these situations, Paulson didn't have to pay one single penny in capital gains tax on those sales.
In mid-2006, Goldman shares sold for about $160. By late 2008, shares traded hands at $47. They've since rebounded to the same $160 level, but we'll go out on a limb: Quitting while he was ahead and shaking hands with the government was one of the best investments Paulson ever made.
James Simons
Simons' hedge fund, Renaissance Technologies, employs an army of computers to exploit market inefficiencies. When markets went totally nuts last year, the computers jumped in and did their work. Renaissance's main fund, Medallion, was up 80% in 2008, or almost 160% before fees. Simons pulled down a cool $2.5 billion for himself. The computers got no bonuses.
Despite the uproar surrounding computerised trading, Simons insists he isn't responsible for wrecking shop. Testifying before Congress last autumn, he claimed "In my opinion, the most culpable [are] the rating agencies, which allowed sows' ears to be sold as silk purses."
John Paulson
Probably the most famous of the hedge-fund managers who got it right, Paulson made himself $3.7 billion in 2007, and another $2 billion in 2008, by correctly betting financial markets would go boom. That's more than $5,400 per minute, every minute, for two years straight.
These days, Paulson's done a complete 180 degree turn: His fund has amassed a massive $2.2 billion stake in Bank of America, as well as smaller stakes in JPMorgan Chase, Goldman Sachs, and Capital One.
Meredith Whitney
Before 2007, the chief things most people knew about Meredith Whitney were that she was married to a professional wrestler, and that she didn't look like most Wall Street analysts.
Then she was one of the first to warn of Citigroup's looming problems. Her CNBC appearances went full-throttle, and people began to listen.
In fact, they listened so much that Whitney quit her post at Oppenheimer and started her own firm, Meredith Whitney Advisory Group, earlier this year.
Two weeks ago, Whitney announced that her firm had acquired the broker-dealer Seegal Benson Leucadia Securities, and would change the name to ... Meredith Whitney Securities. How humble. It's funny what kind of fame one or two good calls can bring.
Nouriel Roubini
I can't prove Roubini -- New York University professor and early predictor that Fannie Mae and Freddie Mac might croak -- has made any meaningful money from the collapse. Common sense tells you that his speaking fees have gone through the roof, but I can't prove it.
But seriously, check out these pictures of Roubini just loving it. Fear sells in more ways than one, my friends.
More on the economy and the markets:
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> A version of this article was originally published on Fool.com. It has been updated by Bruce Jackson, who doesn't have an interest in any of the companies mentioned in this article.
