2007 – 2013

Crisis years : what we have learned so far ?

The Recession Beneficiaries top Five

It’s crucial for individuals who engage in stock exchange to recognize the right time to engage in investments during recession. This could lead to wealth creation. However, as says my good friend Maxim who owns moneyonlinethai  trading review magazine, it is symbolized to catching a falling knife as there are risks in engaging in investments during a price decline. Top individuals known for mastering the art of timing to engage in such investment include:

 

  1. Warren Buffett

 

He’s an individual started with sale of soft drinks to making billions of dollars and buying of companies. In an article he published in the Op-Ed section of the New York Times in 2008, he avowed to buying American stocks in a credit crisis during the downfall in equity.

His purchases included:

  • A $5 billion purchase in perpetual preferred shares in Goldman Sachs that accrued a 10% interest rate with a warranty to buy added Goldman shares with an option of redeemable at 10% premium.
  • A $3 billion purchase in perpetual preferred stock at 10% interest rate redeemable at 10% premium in 3 years.
  • A billions purchase in convertible preferred in Swiss Re and Dow Chemical.

In doing so, Warren helped the above get through the credit crisis at a time when they required liquidity.

 

 

  1. John Paulson

During a crisis, a timely bet against the housing market made Paulson & Co. approximately $2.5 billion. He made a subsequent recovery bet in 2009 that secured him a multi-billion dollar position in Bank of America and $100 million position in Goldman Sachs. He also invested in financial institutions such as JPMorgan Chase and Citigroup and also bet on gold. His hugest gains were on the banks he invested in.

 

 

 

 

 

  1. Jamie Dimon

 

He used fear to his advantage at a timely moment to make huge gains for JPMorgan. He used his bank’s balance sheet’s strength to acquire Washington Mutual and Bear Stearns which were brought down by bets on U.S. housing during the financial crisis. In 2009, JPMorgan acquired 15% value of Bear Stearns and earned the CEO wealth as its value has tripled since then.

 

 

  1. Ben Bernanke

 

He was the head of the Federal Reserve during a vital period when the Fed took action to protect U.S. Financial System from collapsing. In a 2010 article, the Fed made $82 billion profits which included $3.5 billion purchases from AIG and Bear Stearns’ assets, $45 billion in returns from $1 trillion mortgage backed security purchases and $26 billion from government debt’s holding.

 

 

 

 

  1. Carl Icahn

 

 

Carl’s expertise lies in buying gambling firms and companies during financial strains then selling them at high profits when the industry has added value such as the Las Vegas gaming properties. He also managed to secure Vegas’ Fontainebleau property for 4% of its estimated cost which is a promising huge gain upon its completion.

Parting Shot

The above named individuals offer lessons to learn on the significance of timely investments at a time of panic which could be imitated by individuals wishing to make heavy investments when market conditions normalize.



Leave a Reply

Your email address will not be published.

*
*
*