Today crypto market is similar to the financial crisis of 2007-2008.
14 Jun 2023, 17:04
Today crypto market is similar to the financial crisis of 2007-2008. Many have made millions & billions by buying the dip while other we’re panicking. Here are some examples of some of the people who made ALOT of $$$ during that time.
The financial crisis of 2007-2008 was the worst to hit the world since the stock market crash of 1929. In 2007, the U.S. subprime mortgage market collapsed, sending shockwaves throughout the market. The effects were felt across the globe, and even caused the failure of several major banks including Lehman Brothers.
Panic ensued, with people believing they would lose more if they didn't sell their securities. Many investors saw their portfolio values drop by as much as 30%. The sales resulted in rock-bottom prices, erasing any potential gains investors would normally have made without the crisis. While many people were selling, there were others who saw this as a chance to increase their positions in the market at a big discount.
Buffett was especially skilled during the credit debacle. His buys included the purchase of $5 billion in perpetual preferred shares in Goldman Sachs (GS) that paid him a 10% interest rate and also included warrants to buy additional Goldman shares. Goldman also had the option to repurchase the securities at a 10% premium. This agreement was struck between both Buffett and the bank when they struck the deal in 2008. The bank ended up buying back the shares in 2011.
Buffett did the same with General Electric (GE), buying $3 billion in perpetual preferred stock with a 10% interest rate and redeemable in three years at a 10% premium.
He also purchased billions in convertible preferred shares in Swiss Re and Dow Chemical (DOW), all of which required liquidity to get them through the tumultuous credit crisis.
As a result, Buffett has made billions for himself, but has also helped steer these and other American firms through an extremely difficult period.
Hedge fund manager John Paulson reached fame during the credit crisis for a spectacular bet against the U.S. housing market. This timely bet made his firm, Paulson & Co., an estimated $20 billion during the crisis.
He quickly switched gears in 2009 to bet on a subsequent recovery and established a multi-billion dollar position in Bank of America (BAC) as well as an approximately two million shares in Goldman Sachs.
He also bet big on gold at the time and invested heavily in Citigroup (C), JP Morgan Chase (JPM), and a handful of other financial institutions.
Paulson posted huge gains in the big banks in which he invested. The fame he earned during the credit crisis also helped bring in billions in additional assets and lucrative investment management fees for both him and his firm.