The 9 Greatest Speculative Investors of All Time
By: Jonathan Wolfgram,
The 9 greatest speculative investors of all time made high-risk decisions that led to incredible returns.
Much of Wall Street has made fortunes off of the basic principle of minimizing risk. Warren Buffett, regarded by many as the greatest investor of all time, has famously advised investors, “Rule no. 1: never lose money.”
Being protective of assets and allowing compounding returns to work their magic is the source of success behind many of the greatest investors of all time. And then there are the speculators — the investors who have laughed in the face of risk and received a handsome payout. Where much of Wall Street maximizes profit by limiting risk, speculative investors are willing to accept the risk behind a company if the potential reward of success is great enough.
Speculators in the market are happy with bold and uncertain investments as long as there is commensurate profit to be made. These are the venture capitalists, the contrarians and the stock market gamblers who have made millions (and sometimes billions) of dollars off their intuition, analysis and stomach for the risk that comes with it.
Here are the nine greatest speculative investors of all time.
The 9 Greatest Speculative Investors of All Time, #9:
Chamath Palihapitiya is a Canadian venture capitalist, engineer, special purpose acquisition company (SPAC) sponsor and founder of Social Capital. He was a senior executive at Facebook (NASDAQ:FB) from 2007-2011. Upon his departure from the company, Palihapitiya founded his fund and used it to invest in other young technology stocks, such as Yammer and Slack.
His speculative investments largely have focused on SPACs in the last several years, potentially due to the regulatory differences between going public through them instead of with traditional initial public offerings (IPOs).
The 9 Greatest Speculative Investors of All Time, #8:
Peter Thiel is a German-American billionaire investor famous for his co-founding of PayPal (NASDAQ:PYPL) and early investment in Facebook (NASDAQ:FB). The investor was also critical in funding Airbnb (NASDAQ:ABNB), SpaceX and many more daring young companies turned technology giants.
Where most other investors on this list are hedge fund managers by trade, Thiel made his fortune as a venture capitalist. His early faith in a few key world-changing companies made him one of the richest investors of the technology world — these hyper-concentrated investments were often bold, risky plays, but enough of them paid off in full to make Thiel a legendary speculator.
The 9 Greatest Speculative Investors of All Time, #7:
Victor Niederhoffer is an American investor, bestselling author, statistician and champion squash player. His diverse set of talents did little to slow down his successful financial career, where he pioneered many now mainstream investing strategies through the investment bank he founded while still an undergraduate at Harvard.
Niederhoffer published several articles describing market inefficiencies and how to exploit them via speculative investing. He put his own research into practice through another trading firm he founded in 1980, NCZ Commodities. The firm’s success earned the attention and later collaboration of George Soros, who held Niederhoffer in such high regard that he sent his son to work at NCZ Commodities to study under the investor and learn how to trade.
The 9 Greatest Speculative Investors of All Time, #6:
Investor David Tepper is said to be the sole reason Goldman Sachs survived the 1987 market crash. Tepper saw the crash as an opportunity to purchase bonds of the financial institutions crippled by the economic collapse — when the economy recovered, the bonds soared in value.
After this feat of brilliance, Tepper was surprised to see he was passed over for partner at Goldman Sachs, largely due to his reportedly “loud and profane” manner disconcerting senior executives there at the time.
In response, Tepper opened his own fund and generated returns of 61% in 2001. He focused on distressed bonds and took advantage of the financial struggles faced by S&P 500 companies. The investor prioritizes what he refers to as the “diciest of companies,” making significant returns on those investments considered too risky for the rest of the market.
The 9 Greatest Speculative Investors of All Time, #5:
Jacob Little was an investor in the mid-1800’s who made a fortune on bold, speculative investments in the railroad industry. While his trades and insightful market maneuvers were legendary and he was considered the greatest investor of his day, he was not well loved by his peers.
Little had a habit of taking massive short positions that could ultimately ruin companies, or corner hoards of other investors attempting similar strategies. He was one of the earliest and most successful practitioners of market manipulation and became a powerful financial titan.
For a time, the investor’s risky predictions made him one of the richest men in America. The same moves also fully bankrupt him at least three times in his career.
The 9 Greatest Speculative Investors of All Time, #4:
Philip Carret created and ran the Pioneer Fund, one of the first mutual funds in the United States. His creation is the third oldest fund that still exists today.
Through the Pioneer Fund, Carret invested in common stocks and turned a $10,000 initial investment into $8 million by the time of his death in 1998. Warren Buffett said of the investor that “Carret had the best long-term investment record of anyone I know.” He was one of Buffett’s most influential role models.
One of Carret’s greatest contributions to the speculative investing world was a book he published shortly after graduating from Harvard Business School: “The Art of Speculation.” He later developed these ideas in a series of Barron’s articles and finally put them into practice by developing the aggressive Pioneer Fund.
The 9 Greatest Speculative Investors of All Time, #3:
In the early days of the U.S. stock market, accurate and up-to-date information was rare, meaning the best data required a massive operation to obtain and market manipulation was everywhere. Jesse Livermore saw this problem and was an early pioneer of technical analysis as a basis for his trades.
Livermore took huge huge short positions before the 1906 San Francisco earthquake and the Wall Street Crash of 1929. Many of his bold moves are considered legendary today — in a time where analysis was a largely new concept, breaking away from market sentiment and public opinion was far less common and far more risky. And yet, Livermore’s biggest and riskiest moves paid off in full.
The 9 Greatest Speculative Investors of All Time, #2:
George Soros is often cited as one of the greatest speculative investors of all time. His conviction in ultra-risky investments that largely are frowned upon by others in the market has been the driving force behind his multi-billion dollar fortune.
Soros’s fame as a speculative investor was secured by one of his first and biggest bets to date. The investor borrowed billions of dollars in British pounds and immediately converted them to German marks to short the British economy. This move tipped the British market just over the edge, and within hours, the pound had plummeted in value. Soros profited nearly $2 billion in a single day and earned the nickname “the man who broke the Bank of England.”
This trade, alongside his prediction of the 2008 market crash and several other bold short positions, show both the intuition and the stomach of a legendary speculative investor.
The 9 Greatest Speculative Investors of All Time, #1:
Carl Icahn is the founder and controlling shareholder of Icahn Enterprises, a New York City based holding company invested in a wealth of smaller operations. Icahn is credited as being the first ever activist investor, using a strategy that entails purchasing enough shares of a company to have meaningful voting power and forcing changes intended to be beneficial to shareholders.
The strategy is now mainstream for large Wall Street hedge funds due to the early influence of Icahn. He also has been described as a “corporate raider” due to his hostile takeover and asset stripping of Trans World Airlines.
The investor has employed these strategies countless times, among other bold and often highly leveraged investments. For this reason, we are confident in saying that Carl Icahn is the greatest speculative investor of all time.
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Jonathan Wolfgram is an investment analyst who writes website content at Eagle Financial Publications. He graduated from the University of Minnesota with Bachelor’s degrees in Finance and Philosophy. Jonathan writes for www.DividendInvestor.com and www.StockInvestor.com.