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The legends, the crashes, and what they teach

Every rule worth following was paid for by someone. These are their stories — the wins, the wipeouts, and the one lesson each one leaves behind.

Legends

• Benjamin Graham: how a 1929 wipeout created Mr. MarketHe lost most of his fund in the Great Crash, then wrote the rules to never repeat it.
• Bill Ackman: a $27 million hedge and a $4 billion lessonA losing bet reported above $4 billion, then a $27 million hedge that paid off in 2020.
• Bruce Kovner: the cab driver who learned risk the hard wayA $3,000 credit-card bet grew fast, then shrank fast, and taught him about size.
• Carl Icahn: six decades of raids and the 2023 short attackDecades as Wall Street's best-known raider, then a 2023 report that hit his own company.
• Charlie Munger: the partner who taught Buffett to waitHe lost about a third of his fund two years in a row, then helped build Berkshire.
• David Tepper: the 2009 bank bet made when others ranIn early 2009 most investors feared the big banks would fail. He bought them.
• Ed Seykota: the trend follower who taught cutting lossesHe let a computer pick his trades in 1970. His 3 rules were all the same rule.
• George Soros and Black Wednesday: the bet against the poundA $10 billion bet, one wild day in 1992, and the risk math behind it.
• Howard Marks: the memo writer who bought the 2008 panicHe raised money before the 2008 crash, then put it to work while others fled.
• Jesse Livermore: the trader who won 1929 and lost it allHe bet against the 1929 crash and won big. Five years later he was bankrupt.
• Jim Simons: the codebreaker who let the data decideA math professor who didn't trust his gut, and built the most famous fund ever.
• John Bogle: the fired CEO whose "folly" changed investingFired in 1974, he launched an index fund that Wall Street called "Bogle's folly".
• John Paulson and "the greatest trade ever," explainedA small-cost, big-payoff bet in 2007, and the hard years that came after it.
• John Templeton's 1939 bet: buying at maximum pessimismAs war broke out in 1939, he bought 104 of the most hated stocks in America.
• Julian Robertson: the tiger who refused to chase techHe built one of the biggest hedge funds, then closed it rather than chase a bubble.
• Linda Raschke and Turtle Soup: trading the failed breakoutShe took a famous breakout rule and asked: what happens when it fails?
• Mark Minervini: the champion trader who cuts losses firstA self-taught stock trader who won a real-money contest, and writes mostly about losses.
• Michael Burry and The Big Short: right, early and doubtedHe saw the 2008 crisis coming years early. Being early nearly broke his fund.
• Nicolas Darvas: the dancer who traded stocks by telegramA dancer on tour, a broker's daily telegram, and a famous claim that was challenged.
• Paul Tudor Jones and Black Monday: defense firstHe was ready for the 1987 crash. His rules start with the loss, not the win.
• Peter Lynch's Magellan run: know what you ownHe ran America's biggest fund for 13 years. In 1987 it lost a third in a week.
• Ray Dalio's 1982 mistake and the rules it builtHe bet on a crash that never came, went broke, and wrote down why.
• The Wyckoff method: how Richard Wyckoff read supply and demandA century-old way of reading charts: who's buying quietly, and who's selling.
• Stanley Druckenmiller: the $3 billion lesson in chasingOne of the most respected managers ever. His most famous story is a loss.
• Tom Basso: why "Mr. Serenity" cared more about exitsA calm trend follower and a coin-flip test that put exits and size ahead of entries.
• The Turtle Traders: can anyone be taught to trade?In 1983 two traders bet on whether trading can be taught. They ran an ad to find out.
• Warren Buffett's rule No. 1, and the 60 years behind itThe most famous investor alive says his first rule is about losses, not gains.
• William O'Neil and CAN SLIM: the rule to cut losses smallHe studied decades of big winners. His most famous rule is about small losers.

Cautionary tales

• Amaranth Advisors: the $6 billion natural gas wipeoutA star gas trader, one crowded bet, and $6 billion lost in about two weeks.
• Archegos collapse: the hidden bets that cost banks $10 billionHidden borrowing, a few stocks, and a fund that vanished in one week.
• Hunt brothers: the silver corner that crashed in a dayTwo billionaire brothers tried to corner silver. On one Thursday in 1980, it fell 50%.
• Jérôme Kerviel: the €50 billion bet behind a €4.9 billion lossA junior trader, fake hedges, and bets bigger than the bank itself.
• LTCM collapse: when Nobel Prize math met a panicBrilliant models, huge borrowing, and a $4.6 billion loss in under 4 months.
• Nick Leeson: the hidden account that sank Barings BankOne trader, one hidden account, and a 233-year-old bank gone in a weekend.
• Victor Niederhoffer: the genius who blew up twiceA champion, a scholar and a star trader whose fund was wiped out in 1997, then again in 2007.

Market history

• Asian financial crisis 1997: how one currency broke a regionThailand let its currency float on 2 July 1997. Within months, half of Asia was in trouble.
• The bitcoin crash of 2022: Terra, FTX and a 77% fall from the topA stablecoin that broke, lenders that froze, and an exchange that wasn't safe.
• Black Monday 1987: the day the Dow fell 22.6%The biggest one-day fall in Dow history, and why stops couldn't save everyone.
• Black Wednesday 1992: the day the pound broke freeTwo rate rises in one day, billions spent, and a currency peg that broke anyway.
• Bond crash 2022: the year "safe" money fell 13%US bonds had their worst year on record in 2022. Stocks fell too. Here's why.
• Brexit vote 2016: the night the pound fell 10%Markets bet on "Remain". When "Leave" won, the pound had its worst day in decades.
• China stock crash 2015: the boom built on borrowed moneyShanghai stocks rose about 150%, then lost 38% in ten weeks. Rules to stop it backfired.
• The COVID crash of 2020: a 34% fall in 23 days, then a recordFour circuit breakers in eight days, then a new record high within six months.
• The crash of 1929: how the Dow fell 89%Borrowed money, two black days, and a fall that took 25 years to recover.
• The dot-com bubble: how the Nasdaq fell 78%A real revolution, a crazy price tag, and a 15-year wait to get back.
• Enron collapse 2001: from $90 a share to bankruptcyEnron was a Wall Street star. In 16 months, its stock went from $90 to almost nothing.
• The 2008 financial crisis: how Lehman's fall shook every marketBad home loans, borrowed money, and the week the banking system nearly froze.
• The flash crash of 2010: the Dow's 1,000-point drop in minutesNearly 1,000 points gone and back in about 20 minutes. Some shares traded at a penny.
• The GameStop short squeeze: from $20 to $483 in a monthReddit, short sellers and a video-game store. What a squeeze looks like up close.
• Oil below zero: the day crude settled at −$37.63Sellers paid buyers to take oil. The reason was one contract's last day.
• Russian default 1998: when "safe" government bonds brokeRussia's bonds paid huge interest. Then, on 17 August 1998, it stopped paying.
• SVB collapse 2023: the bank run that took one daySVB lost $42 billion in deposits in one day. Its "safe" bonds were the problem.
• The Swiss franc shock of 2015: when the 1.20 floor brokeA promise held for 3 years, broken in a morning. Some stops filled 20% away.
• Terra Luna collapse 2022: how a $1 coin lost its dollarA "stablecoin" meant to stay at $1 broke in May 2022, and about $40 billion vanished.
• Tulip mania: the 1637 bubble, and how much of it is mythThe world's most famous bubble, and why the real story is smaller and stranger.
• Volkswagen short squeeze 2008: the world's priciest stockIn two days, VW shares went from about €211 to over €1,000, for a moment the world's most valuable firm.
• Yen carry trade unwind 2024: Japan's worst day since 1987On 5 August 2024, the Nikkei fell 12.4%. A popular trade on cheap yen loans was reversing.