Top 10 Investors Who Lost A Fortune and How
#10: Jesse Livermore [a]
Despite being a trailblazer in the practice of stock trading, Jesse Livermore’s story is ultimately one of tragedy. His greatest success came during the 1929 crash, where he aggressively shorted the market and amassed a staggering $100 million; an impressive amount even today, let alone for the time. But despite his brilliance, Livermore struggled with personal problems which severely affected his mental health. To make the situation even worse, the Securities Exchange Act of 1934 imposed new rules that ruined how Livermore operated. This included an increased regulation of short selling, which was Livermore’s bread and butter. By 1934 he was bankrupt, having accrued debts of $2.5 million. He ultimately took his own life in 1940, writing in a note “I am a failure.”
#9: George Soros [b]
Known as “The Man Who Broke the Bank of England,” Soros made $1 billion by shorting the British pound in 1992, a famous move known as “The Black Wednesday” trade. But he has also suffered some extreme defeats. For example, he lost roughly $1 billion by betting against U.S. stocks after Donald Trump’s election in 2016, having expected a market downturn. The market went up. But perhaps more significantly, Soros lost billions when the dotcom bubble burst in early 2000. Like many, Soros had invested heavily in technology stocks, and when the bubble burst, so too did his empire. Well, OK, not really, but he did lose a significant amount of money and was forced to restructure his entire investment strategy.
#8: Bill Ackman[c]
The founder of Pershing Square Capital Management, Bill Ackman made a huge mistake by investing heavily in Valeant Pharmaceuticals. Ackman’s company had purchased an 8.5% stake in the company, but it faced significant controversies in 2016. There were famous accusations of drug price gouging, shady accounting practices, and even fraud, resulting in an investigation by the Securities and Exchange Commission. Its stock plummeted by as much as 90% in the wake of the controversy, and its name was changed to Bausch Health Companies. And while this was going on, Ackman jettisoned his entire stake in Valeant, accruing a loss of over $4 billion.
#7: Carl Icahn [d]
This billionaire investor made his fortune by taking control of struggling businesses, cutting costs, and pressuring management to improve efficiency in order to benefit shareholders. As such, he developed a reputation as a corporate raider, especially following the hostile takeover of Trans World Airlines in the 1980s. However, his fortune partly collapsed in May 2023 when a firm called Hindenburg Research accused Icahn of overvaluing his assets and running a risky financial structure, like paying an unsustainable dividend to shareholders. The stock price of Icahn Enterprises dropped sharply following the scathing report, reducing Icahn’s personal net worth by as much as $10 billion.
#6: Isaac Newton
Yes, the Isaac Newton lost a fortune trading in stocks, and shortly before his death in 1727. The South Sea Company was a British trading business that had a monopoly on trade with South America in the early 18th century. This was the Nvidia of its day, being heavily promoted as a lucrative investment with a skyrocketing stock that had nowhere to go but up. Newton made thousands with the company, but the infamous South Sea Bubble burst in 1720 after investors realized that the company couldn’t justify its insane stock price. This was the stock market crash of its day, and thousands of investors, including Newton, were ruined. He ultimately lost around £20,000[e], which was a substantial sum at the time.
#5: John Meriwether[f]
This name, and his company Long-Term Capital Management, are infamous in financial circles. John Meriwether worked at Salomon Brothers until he founded LTCM in 1994. The hedge fund made a ton of money in a short amount of time thanks to heavy borrowing, complex modeling, and risky investments in government bonds. But the latter got them in trouble, with both Asia and Russia suffering a financial crisis in the late 1990s. The markets went wild, investors stopped trusting in government bonds, and LTCM’s losses spiraled to the tune of $4.6 billion. Their catastrophic failure nearly caused a financial collapse, and the Federal Reserve Bank of New York was forced to step in and bail them out.
#4: Michael J. Saylor [g]
One of the biggest victims of the dotcom bubble was Michael J. Saylor, co-founder and CEO of MicroStrategy. The company’s stock skyrocketed in the late ‘90s owing to great tech enthusiasm, and Saylor became a billionaire. But in March of 2000, MicroStrategy was forced to restate its financial results and the company was accused of securities fraud. These events caused its inflated stock to collapse and helped to trigger the dotcom bubble burst. Saylor lost about $6 billion in the fallout, and to make matters worse, fraud charges were later filed against the company by the Securities and Exchange Commission. Despite this, Saylor has remained in the financial business and is currently a prominent investor in Bitcoin.
#3: Ray Dalio[h]
This Harvard alumnus founded Bridgewater Associates in 1975, which is currently the largest hedge fund in the world. So you know he’s doing something right! But that wasn’t always the case. In the early 1980s, Dalio made a big bet predicting that the U.S. economy was going to crash. However, he couldn’t have been more wrong. The economy boomed, Bridgewater nearly went bankrupt, and Dalio lost everything. He had to let all of his employees go and was forced to run the company out of his small apartment while borrowing money from his dad to keep the lights on. But instead of giving up, Dalio learned from his (very) costly mistake and became one of the most successful investors in history.
#2: Bill Hwang[i]
In just ten days, Bill Hwang lost over $30 billion. Let’s back up. Hwang ran Archegos Capital Management and used a high-risk trading strategy called total return swaps to amass a fortune. Basically, he borrowed heavily from banks, made huge bets, and allowed the banks to hold the shares, keeping Archegos hidden from pesky regulators. Long story short, the stocks that he owned sank, the banks panicked and liquidated positions, and Hwang’s entire portfolio collapsed to the tune of $20 billion. The banks that lent money to Hwang also suffered losses as high as $10 billion. In April 2022, Hwang was charged with racketeering and fraud and sentenced to eighteen years in prison.
#1: Masayoshi Son[j]
If you want a dramatic story about stock market woes, look no further than Japanese investor Masayoshi Son. Son and his SoftBank Group were hit hard by the tech crash of 2022, with poor investments in failed start-ups like Katerra and WeWork. As a result, SoftBank lost nearly $30 billion in valuation. But that’s nothing. In the late 1990s, Son had invested heavily in various internet companies, including Alibaba and Yahoo!, sending the valuation of SoftBank into the stratosphere. And like many companies at the time, this valuation came crashing back down to Earth when the bubble popped in 2000. In just one day, SoftBank lost 93% of its market value, and Son personally lost upwards of $70 billion.
What was the most you ever lost in a gamble? Let us know in the comments below!
[a]LIVVER-more https://youtu.be/J3rwxg6X444?si=bk5ZN_8GMlxXiBV7&t=77
[b]SORE-oce / SORE-ose (second syllable rhymes with "dose") https://youtu.be/kKh9a0nJR68?si=01TDX99_QaJY25VF&t=24
[c]ACK-min https://youtu.be/WEDIj9JBTC8?si=SdzWgYFyADPDIAxj&t=12
PUR-shing https://youtu.be/WEDIj9JBTC8?si=Ib3tT6snSJdQhTfI&t=13
VALLEY-int https://youtu.be/tMesG9clTLM?si=8N4Qob_CbBBtEQzf&t=9
BAO-sh https://youtu.be/DgC4l1V3EUo?si=CqplZ8o_nHupHIyi&t=20
[d]Icon https://youtu.be/HlfgQ4_7EYA?si=GdjmT8158q9k3AM6&t=9
[e]£ = pounds
[f]merry-weather https://youtu.be/ZqV1hq3dCCE?si=eiPvC638rZwH1UPU&t=5
solomon https://youtu.be/O0R_9L_D2Yk?si=r-_oyIoXDuAdZisV&t=22
[g]sailor https://youtu.be/Fztho2KqqdU?si=diQGmTeosNbnxk81
[h]DALLY-oh / DAL-yoh https://youtu.be/bXFRAXuEi_E?si=bh6HZOkcNliiciF6&t=3
[i]wong / hwong https://youtu.be/4fPOaGkDGDg?si=ZFHt3SZcimX4nuCw&t=33
arr-KAY-gose ("gose" rhymes with "dose") https://youtu.be/MhMhg97fmzE?si=MfACorjkoAaNFaFn&t=55
[j]mawssa-YOH-shee sone https://youtu.be/ffcPg6GHLso?si=6RHG2fYi0c9F-z53&t=31
son = https://forvo.com/search/%E5%AD%AB/
kuh-TARE-uh https://youtu.be/8xgXJNwNV2k?si=5WK7FxELO8u6kHQY&t=5
alley-BAW-baw https://youtu.be/gk69hV6LEgI?si=4YVqOzONj0RTS4O5&t=19
