The best traders in the history of finance

11 4 2016 - No comment
ProRealTime

Who are the best traders on the planet?

The trader’s profession has always caused a lot of "talk" among the public at large. Criticized, envied for their results, traders have been in the doghouse since the 2007 financial crisis and the consequences that it had on the real economy. Anything and everything has been said about professional traders, accusing them of all evils throughout our economy, but it is good to know that our economy needs traders in order to run smoothly.

Market finance is composed of very complex professions that are worth understanding before indulging in their criticism. It is this lack of knowledge which has, primarily, caused a fire fuelled by senseless criticism against market finance players.

Among the shortcomings of market finance, the greatest, in my opinion, is the remuneration of the biggest traders. Their salary related bonuses are proportional to their monthly profits, they can reach meaningless amounts and cause traders to take huge risks because they have little to lose at the end of the day. In the worst cases, they are dismissed and claim unemployment benefits. Let us not forget that bank traders are mere employees as opposed to traders on their own account who manage their own money.

The average wage of a trader is €297,000 per year, the lowest performers earn no more than €30,000 but the "gods" of finance can earn record bonuses. The following is a presentation of 12 traders who are the most talented and have the highest bonuses:

Warren Buffet

Warren Buffet The Oracle of Omaha

Warren was born in Omaha the son of a congressman and trader on the stock market. Interested and initiated into finance from a young age, he studied at Columbia University. Particularly gifted, his portfolios consisted of money from family and friends, he achieved exceptional performance for that era (over 30%). Through his excellent results Warren Buffet convinced other investors to entrust him with funds to invest in the stock market: in 1960 he already managed 7 investment funds from his home. In 1962 after a strong valuation of his securities, he consolidated his 7 funds under Buffet Partnership Limited. In 1965, he took control of Berkshire Hathaway which subsequently became his main investment fund. The best of Warren Buffet's investments have been:

  • Dempster: an industrial flour mill (1961/1963)
  • American Express (1964/1967)
  • Berkshire Hathaway
  • National Indemnity
  • The Washington Post
  • Nebraska Furniture Mart
  • Coca-cola

His strategy is simple, he always invests in businesses that he considers undervalued with huge potential only in the long term. He only invests in businesses that he understands perfectly (he therefore avoids high-tech companies). Buffet only invests in the long term and therefore suffered heavy losses in 1974, 1987 and 2009 (with the subprime crisis, initiated in 2007). However these very wise investments have generated substantial income over the long term since he has outperformed indices such as the Dow Jones and the S&P 500 for more than forty years!

Warren Buffet is considered the best trader of all time.

His Berkshire Hathaway investment fund totals $427 billion and his personal wealth is estimated to be $53.5 billion.

George Soros

George Soros: the man who broke the Bank of England

George Soros was born in 1930 in Budapest, his father was a writer. In 1947 he immigrated to England to study economics at the London School of Economics. Once he graduated, he began as a broker in The City and then moved quickly on to Wall-Street to "earn enough money to become a philosopher or a writer for the rest of his life". But fate wanted other things for Soros who, after his success on the American markets, founded his own investment fund, Soros Fund Management. The Soros fund speciality was speculating on the burst of the financial bubble. He gambled against Japanese equities (but too early to actually earn money). In 1992, when England was in full recession, he gambled £10 billion on the collapse of the pound which exerted so much pressure that the regime collapsed and the pound was withdrawn from the European Monetary System. Since then he has been nicknamed "the man who broke the Bank of England". He pocketed $1.8 billion on this single transaction. His fund continued to speculate on the collapse of other currencies including the Franc (wrongly this time).

Today, Soros Fund Management manages more than $28 billion of assets and George Soros' personal wealth is estimated to be $19.2 billion.

James Simons

James Simons: the mathematician of finance

James Simons is one of the precursors of financial mathematics, as early as 1980 he created a financial investment fund based on mathematical investment models. In 2007, he even anticipated the subprime crisis and short sold in anticipation of a price fall. Passionate about mathematics, James Simon today continues to pay a portion of his profits to university mathematics departments.

His wealth is $11.7 billion. He is currently retired and has given up control of his "renaissance technologies" hedge fund.

John Paulson

John Paulson: the man who predicted the subprime crisis

John Paulson is also nicknamed "the sultan of subprime" in the New York monthly news ranking. He is the founder of the Paulson and Co hedge fund. This genius of a trader was able to anticipate the 2007 subprime crisis and made short sales with the majority of his hedge funds. For some of these funds, he multiplied their capital by 2,500%! Thanks to this maneuver, Paulson made $3 billion in 2007 and, even today, can afford the luxury of employing Alan Greenspan as a consultant in one of his funds.

Whilst John Paulson was known for his foresight and speculation on the collapse of subprimes, using his funds he has also invested in industry and agriculture ($3.7 billion in bonuses in 2007).

His wealth is estimated to be $11.2 billion and his funds manage $35 billion in financial assets between them.

Steven Cohen: the hedge fund king

Steve Cohen is an American trader who made a fortune by short selling shares. The son of a tailor and a piano teacher, he is from a modest background on Long Island. From a Jewish family, he was part of the first Jewish fraternity in the United States, Zeta Beta Tau. He made his wealth as a broker for the company Gruntal & Co and then created his own investment fund with "only" $20 million. He is also known under the name of Mr. $100,000 per day since this was his average earnings at Gruntal & Co. The success of his fund's VAD shares determined the success the fund which today manages $14 billion in assets.

His wealth is estimated to be $9.3 billion.

Paul Tudor Jones

Paul Tudor Jones The "Robin Hood" of New York

Paul Tudor started as a trader for E.F Hutton and then applied to Harvard for a finance program. After being admitted to Harvard he changed his mind and decided to do his professional training directly on the financial markets. He specialised in futures and cotton markets. In 1980 Paul Tudor founded the Tudor Investment Corporation. He really made his fortune in 1987 when he predicted Black Monday and sold short in large quantities. This week, rumour has it, that he has tripled his capital.

Today his investment fund manages nearly $20 billion and his personal wealth is estimated to be $3.6 billion.

Kenneth Griffin

Ken Griffin is a former student of Harvard where he developed his passion for market finance. From his student dorm room, he managed two investment funds including one where the funds came from his grandmother. He even went so far as to install a satellite link in his bedroom at Harvard to be able to follow market prices. His excellent results lead to his recruitment by the Glenwood Capital fund which entrusted him with $1 million as soon as he left Harvard in 1989. In one year the fund had made over 70% of its value. In 1990, Ken Griffin established his own fund: Citadel LLC with "only" $4.2 million. His was the first fund to securities debt which made Ken Griffin a feared man on Wall Street. As with Chris Hohn and Steven Cohen, he is a very discreet man who appears as little as possible in the media.

His wealth is estimated to be $3 billion and his Citadel LLC fund today manages $14 billion.

Philip Falcone

Philip Falcone: hockey player from New York

Former dedicated hockey player at Harvard, Phil Falcone is one of the most talented traders of his time as he has been ranked, for 10 years now, in the class of the 100 most powerful traders in the world. These results have therefore been consistent for 10 years. A senior manager at Barclay's, he left his position to set up his own investment fund with "only" $25 million. He made his fortune quickly by gambling against subprimes and pocketed $1.5 billion to $2 billion in 2007. He is also a specialist in buying out or investing in companies in financial difficulties.

Today his wealth is estimated to be $1.2 billion.

Noam Gottesman

Noam Gottesman is the son of Jewish Art collector Dov Gottesman. He began his career as a trader for Goldman Sachs and then left his position to create GLG Partners with the Belgian, Pierre Lagrange. This was the first fund on Wall-Street to only manage hedge funds. This fund has experienced many setbacks, being suspected of insider trading on many occasions, however, it has always been exonerated. In 2010 the fund was bought by the Man Group plc which earned $1.6 billion for its founders.

The GLG Partners fund manages $26.2 billion today and Noam Gottesman's wealth is estimated to be $1.6 billion.

Alan Howard

Alan Howard is the co-founder of the Swiss fund Brevan Howard. As Alan Howard is very discreet and litigious over leaked information about his personal life, very little information is available on his progress. He graduated from the prestigious Imperial College in London.

His investment fund manages $26 billion of assets today and his personal wealth is estimated to be $1.6 billion.

Pierre Lagrange

Pierre Lagrange: the richest Belgian trader

Pierre Lagrange, of Belgian origin, graduated from the Solvay Brussels School of Economics and Management. After trading for JP Morgan and Goldman Sachs, he co-founded the investment fund GLG Partners with Noam Gottesman. Since then he has lived in London. His divorce from his wife Catherine Anspach was the most costly in England at £160 million.

The GLG Partners fund today manages $26.2 billion and Pierre Lagrange's wealth is estimated to be £300 million (after his divorce).

Christopher Cooper Hohn

Chris Hohn: the philanthropist or the grasshopper (on the German market)

Chris Hohn is a fund manager and a philanthropist. From a modest background, he was brilliant at his Harvard studies from where he graduated as a Baker Scholar, which is to say in the top 5% of students. He is one of the only traders on Wall-Street to have a modest lifestyle that he shares with his wife, Jamie Cooper. He blithely denounces traders' salaries which he finds particularly shameful.  He manages the TCI or the Children's Investment Fund, this fund pays a portion of his profits to charitable associations fighting against poverty and disease in the third world. The fund is also one of the 30 largest charitable associations in England fighting primarily against AIDS in third world countries.

His Investment Fund still manages $18 billion today but he doesn't have huge personal wealth as he gives the majority of it to aid charitable works.

 

 

The best traders in the history of finance
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