Many tend to forget what it means to be a real investor and a trader in times of difficulties. Whether you are a newbie or you have experience in the field, it’s essential to stay calm and not rush to bad decisions out of desperation. The key is patience, knowledge, and waiting. It might sound easier said than done, but only those that do so truly gain, even in the most challenging times. Being among the top three investors who profited from the global crisis isn’t an easy task to do, nor if they benefited from others’ misfortune. They knew when to act.
Certainly, panic started to rise as soon as any crisis, and many investors had to see their value drop immensely. Many were selling, but more experienced traders saw this as an opportunity to rise again to ensure their position in the stock market at the right time. That’s why we present you, the top three investors, because you can learn from them.
- Warren Buffett
Even if you are not in the stock market world, you have probably heard the name, Warren Buffett. What happened in October 2008 was that Buffett stated he was buying American stocks during the equity downfall caused by the credit crisis.
Buffett’s skills mainly work during difficult situations. His purchases included the $5 billion buy-in constant popular shares in Goldman Sachs (GS) from which he gained a 10% interest rate and incorporated warrants to buy extra Goldman shares. GS was able to purchase the securities again at a 10% premium as well. This led to an agreement between both Buffett and the bank when the deal was struck in 2008. Eventually, the bank bought back the shares three years later.
This year, during the pandemic, Buffett decided to buy General Electric (GE) for $3 billion with a 10% interest rate, which means he will gain even more in the next three years. Additionally, he bought billions in exchangeable shares in Swiss Re and Dow Chemical (DOW), which all had massive liquidity. Consequently, Buffett earned billions for himself while also helping to stimulate companies facing difficult times during the lockdown.
- Jamie Dimon
While not an investor in a real sense, Jamie Dimon made fair use of the credit crisis fear, gaining vast amounts for JP Morgan. At the financial crisis peak, he used the opportunity to obtain Bear Stearns and Washington Mutual, the two financial institutions destroyed by huge U.S. housing bets. JP Morgan bought Bear Stearns for the price of $10 per share, in 2008. By the end of the same year, it also acquired WaMu. The price was worth just a small amount of WaMu’s value several months ago. Jamie Damon came from investing amid a crisis to having tripled the shares of JP Morgan over ten years. In the end, and made shareholders and the CEO very rich.
- Carl Icahn
Another famous example of a fund investor with a brilliant record of purchasing and making money during a crisis is Carl Icahn. His expertise is in acquiring companies and gambling firms. Previously, he had obtained three Las Vegas gaming properties as they were struggling financially and sold them at a hefty profit as soon as the company started to recover.
In 2007, Icahn decided to sell the three properties for around $1,000,000, proving his experience and knowledge in market peaks and troughs — multiplying his primary investment. He started negotiating for the second time in the middle of the credit crisis, ensuring the previously bankrupt Fontainebleau property in Vegas for around $155 million, or about 4% of the estimated cost of building the property. In 2017, Icahn eventually sold the incomplete property for almost $600 million to two investment firms, quadrupling it.
Seeing the opportunities these investors took gives us a valuable lesson – having enough experience, waiting for the right moment, but also calmly following your gut can help you gain in the most unexpected times. These people were able to dive into the territory others weren’t ready to explore, and in return, they got to reap the benefits. What is certain is that whatever the crisis is in the world, there is always a way to profit on the stock market if you approach it with a calm mind.