Greatest Wall Street Bets
of All Time

The Setup

A one-eyed hedge fund manager in San Jose read thousands of individual mortgage loan documents and realized the entire US housing market was built on loans that could never be repaid. His investors thought he was insane. His own colleagues tried to shut down the fund. Goldman Sachs laughed when he asked them to create credit default swaps on subprime mortgage bonds — then happily sold them to him.

The Bet

Burry bought credit default swaps against subprime mortgage-backed securities — essentially insurance policies that would pay out when the loans defaulted. He bet $1.3 billion of his fund's capital. For two years, he bled money on premiums while the housing market kept going up. His investors sent angry letters demanding he close the positions.

The Setup

Britain was part of the European Exchange Rate Mechanism (ERM), which pegged the pound to the German mark. But the UK economy was in recession and needed lower interest rates, while Germany — dealing with reunification costs — needed high rates. The peg was mathematically unsustainable. Soros saw it. The Bank of England saw it too, but politics kept them locked in.

The Bet

Soros and his Quantum Fund built a $10 billion short position against the British pound. Ten billion dollars. Against a G7 currency defended by a central bank. On September 16, 1992, the Bank of England raised interest rates twice in one day to defend the peg. It didn't matter. Soros kept selling pounds faster than the BoE could buy them.

The Setup

The Roaring Twenties had created the greatest stock market bubble in history. Shoeshine boys were giving stock tips. People were buying stocks with 90% margin. Livermore — already a legendary trader who'd been broke multiple times — recognized the mania from decades of market experience. He started building short positions quietly while everyone else was euphoric.

The Bet

Livermore systematically shorted the entire market in the weeks leading up to the October 1929 crash. When the market fell 12% on Black Monday and Black Tuesday, his short positions printed. While millions of Americans lost everything, Livermore was on the other side of every trade.

The Setup

While Burry was the first to see the subprime crisis, Paulson made the biggest bet on it. A relatively unknown merger-arbitrage manager, Paulson became convinced the housing market was a bubble and created an entirely new fund — the Paulson Credit Opportunities Fund — specifically to short it. Most investors passed. The fund was initially tiny.

The Bet

Paulson bought credit default swaps on subprime CDOs, the most toxic slices of the mortgage market. His team identified the worst loan pools — the ones with the highest percentage of no-doc, adjustable-rate mortgages in bubble markets — and bought protection on exactly those. When the housing market collapsed, these CDOs went to zero.

The Setup

A financial advisor from Massachusetts who went by 'DeepFuckingValue' on Reddit and 'Roaring Kitty' on YouTube spotted that GameStop was deeply undervalued, had a new activist investor (Ryan Cohen), and was shorted over 140% of its float. That last number meant more shares were sold short than actually existed. He posted his thesis and his positions on r/wallstreetbets. Nobody cared. For months.

The Bet

DFV bought $53,000 in GameStop call options and shares starting in mid-2019 when GME was around $5. He posted monthly updates showing his position getting destroyed, then slowly recovering. In January 2021, the squeeze began. His 'YOLO update' posts became the most-watched financial content on the internet. He held through the entire mania.

The Setup

Jones studied the 1929 crash obsessively and noticed eerie parallels with the 1987 market: similar chart patterns, similar overvaluation, similar market structure with new computerized 'portfolio insurance' that would accelerate selling. He told his documentary crew (in the now-legendary PBS film) that he believed a crash was coming. Then he positioned for it.

The Bet

Jones loaded up on short positions and put options heading into October 1987. When Black Monday hit — the single worst percentage decline in stock market history, with the Dow dropping 22% in one day — his fund was aggressively positioned on the short side.

The Setup

Enron was the seventh-largest company in America. Wall Street analysts had 'strong buy' ratings on it. Fortune named it 'America's Most Innovative Company' six years in a row. The stock was trading at $90. Jim Chanos — the most famous short seller alive — started reading Enron's financial statements and noticed something nobody else did: the company's return on invested capital was 7%, but its cost of capital was higher. It was destroying value while claiming to create it.

The Bet

Chanos shorted Enron stock starting in November 2000 at around $80. Wall Street called him crazy. Enron's CEO Ken Lay publicly attacked short sellers. Chanos calmly pointed to the financials — the special purpose entities, the mark-to-market accounting on long-term contracts, the insider selling. One by one, the accounting tricks unraveled.

The Setup

In late February 2020, Bill Ackman realized that COVID-19 was going to devastate global markets. While most of Wall Street was still debating whether the virus was 'just a flu,' Ackman's team at Pershing Square saw the exponential infection curves from China and Italy and concluded that lockdowns were inevitable. The market hadn't priced in any of it yet.

The Bet

Ackman spent $27 million buying credit default swaps on investment-grade and high-yield corporate bond indices. It was a hedge on his equity portfolio — if the market crashed, these CDS positions would explode in value. He bought the protection when nobody else wanted it, which meant it was absurdly cheap.

The Setup

When the Berlin Wall fell in November 1989, most traders saw geopolitical uncertainty. Druckenmiller — then managing money for George Soros at the Quantum Fund — saw a massive, inevitable capital flow. West Germany would need to spend hundreds of billions of marks to rebuild East Germany. That spending would cause inflation. Inflation would force the Bundesbank to raise interest rates. Higher rates would make the German mark the strongest currency in Europe.

The Bet

Druckenmiller went massively long the German mark, buying it against every currency he could. When Soros asked him the size of his position, Druckenmiller said a few hundred million. Soros famously told him it was 'ridiculous' — and to double it. They built a multi-billion dollar long position in the mark.

The Setup

Andrew Left had been a successful activist short seller for years. Citron Research had called out dozens of overvalued and fraudulent companies. So when GameStop started its parabolic rise in January 2021, Left did what he always did — he published a short thesis, calling GME buyers 'suckers' and predicting the stock would fall back to $20. He livestreamed his bearish case on YouTube.

The Bet

Left shorted GameStop at around $40, publicly taunting the Reddit crowd. What he didn't understand was that this wasn't about fundamentals anymore — it was a social movement. Millions of retail traders piled in specifically because Citron was short. The stock went from $40 to $483 in days. Left covered his short at a massive loss.

The Setup

Jim Simons, a former NSA codebreaker and math professor, founded Renaissance Technologies and built the Medallion Fund — a quantitative trading operation run by mathematicians, physicists, and computer scientists. No MBAs. No finance backgrounds. Just people who could find patterns in data that no human trader could see. The fund has been closed to outside investors since 1993 because it's too good.

The Bet

Medallion doesn't make 'a bet.' It makes millions of small, statistical bets per day across every asset class. The edge is in the models — proprietary algorithms that identify and exploit tiny market inefficiencies at massive scale. Renaissance guards its methods so closely that employees sign non-competes and non-disclosures that make CIA contracts look casual.

The Setup

After Credit Suisse collapsed in 2023, one anonymous Reddit user on r/wallstreetbets posted a thesis that Deutsche Bank was the next domino. The logic: DB has $42 trillion in notional derivatives exposure, the IMF called it the most systemically important bank in the world, and its stock was down 90% from its 2007 peak. If systemic banking crises cascade (and they always do), DB was the obvious next target.

The Bet

The user YOLO'd $6,500 into Deutsche Bank puts. Not life-changing money by WSB standards. But the thesis behind it sparked a massive discussion thread about counterparty risk, derivatives exposure, and what happens when the 'second domino' falls.