If you try to come up with a list of the best traders off the top of your head, you’d probably list the legends like Warren Buffet, George Soros, Paul Tudor Jones, or John Paulson. These investors were in the prime of their trading career decades ago, so let’s take a look at where they are now and how they’ve managed their wealth.
Referred to as the “Oracle of Omaha” Warren Buffet is an American business magnate who is still considered as one of the best investors of all time. He consistently ranks as one of the world’s wealthiest people with his net worth of $66.4 billion as of August 2016.
Buffet prides himself in value investing, as his fortunes were made in buying shares of companies at prices less than their intrinsic values, thereby giving his stake significant room to increase in value. These included investing in textile company Berkshire Hathaway, Washington Post Company, ABC, and Hochschild, Kohn & Co.
Buffet also subscribed to the belief that, in a market economy, the rich earn outsized rewards for their talents. Because of that, he said that his children will not inherit a significant proportion of his wealth and instead allocated almost all of it to philanthropic causes.
In June 2006, Buffet stated his intention to give 83% of his wealth to the Bill & Melinda Gates Foundation, ranking as the largest charitable donation in history. In 2010, he signed the “Gates-Buffet Giving Pledge” along with Bill Gates and Facebook CEO Mark Zuckerberg in promising to give at least half of their wealth to charity.
Infamously known as the “Man Who Broke the Bank of England”, George Soros made it to the hall of fame of financial market greats with his massive pound short during the 1992 Black Wednesday crisis in the United Kingdom. At that time, he and his trading team recognized the unfavorable position of the UK economy ahead of its inclusion in the European Exchange Rate Mechanism, thereby setting the stage for a significant drop in the pound’s value.
Soros scored another huge set of profits in his short position on the Thai baht during the 1997 Asian financial crisis. In January this year, Soros predicted that the markets could be on the brink of another collapse based on the state of global currencies, stocks, and commodity markets, as well as the Chinese yuan. At present, Soros is still Chairman of Soros Fund Management and remains an adviser to the Quantum Fund.
Soros has also been involved in a number of philanthropic causes. In fact, he has been at it as early as the 1970s when he provided funds to help black students attend the University of Cape Town in South Africa. In 2014, he has supported the Black Lives Matter movement and has donated $1 million to the Super PAC Priorities USA Action which supports Hillary Clinton in this year’s presidential race.
Paul Tudor Jones
Paul Tudor Jones also made his fortune in betting on markets to collapse, particularly the 1987 stock market crash. Jones is a known contrarian trader, trying to pick market tops and bottoms and attempting to buy or sell at these major turning points.
This trading style was featured in TRADER: The Documentary in 1987, which shows Jones as a young trader who was able to predict the market crash. However, according to the film’s director, Jones requested that this movie be removed from circulation sometime in the 90s.
According to Forbes, Jones’ has a net worth of $4.7 billion as of September 2015. To date, he is still managing his hedge fund, Tudor Investment Corporation. He was also ranked as the 108th richest American and the 345th richest man in the world in 2014.
Jones still manages the Robin Hood Foundation, which he founded in 1988 to focus on poverty reduction and is backed by hedge fund operators. He also owns Grumeti Reserves in Tanzania and has set up a trust for a private reserve near the Mozambique border in Zimbabwe.
Among the more recent trading greats is John Paulson, who is lauded for making the “greatest trade ever” in shorting the real estate market on the onset of the 2008 global financial crisis. Paulson foresaw the real estate bubble in the US and made his positions through the collateralized debt obligation market. This was detailed in Gregory Zuckerman’s book called The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.
His beginnings in the industry date much earlier when he founded Paulson & Co. in 1994. At that time, his firm was relatively unknown in Wall Street before his infamous short during the financial crisis transformed him to a trading legend. In 2010, he set up another hedge fund that reportedly made $5 billion per year but suffered from losing investments in Bank of America, Citigroup, and Sino-Forest Corporation. His net worth is estimated at $8.6 billion as of September 2016.
Paulson dabbled in philanthropy as well, donating $15 million to the Center for Responsible Lending, $20 million to New York University Stern School of Business, $5 million to the Southampton Hospital in Long Island, and $15 million to build a children’s hospital in Ecuador.
Paulson has also been actively making political contributions. In 2011, he donated $11 million to Mitt Romney’s Super PAC and even held a fundraiser at his New York townhouse for the then GOP Presidential candidate. This year, he serves as one of the top economic advisers on Republican nominee Donald Trump’s campaign.
If there’s one thing in common about these trading greats is that they’ve devoted a considerable portion of their money to charity or philanthropy after making it big in the financial world. Apart from that, it’s also worth noting that their legendary status was not achieved without any setbacks and that it has taken them years of hard work to rise from their humble beginnings and get to where they are today.