There have been far and few tales of successful bear positions taken in the market but more often than not, many seldom have the stomach nor guts to even consider such a move, regardless the magnitude of the hunch. Not since George Soros’s 2010 bet against the gold prices and John Paulson’s 2007 USD15 billion profit did the global market witness something that catches attention well enough for head-turners to pay attention. More recently, Soros’s increasing stake of more than USD2.2 billion in another pre-emptive move, predicting that the market is heading for a probable crash, is yet another.
Termed variably by some as catastrophe investing, the common ways of execution depict that investors use appropriate put options in the equity markets or shorting of bills. Investors are, over the years, turning towards the unexpected and seeking for better returns without loading up on unwanted risks. However, such bearish prognosis is difficult to anticipate and pick out unless there exist an in-depth knowledge of the macro-economy.
While these can generally be investment strategies employed by small consortiums of individuals or at most a cluster of small firms, the market has not seen mega set-ups lasting long enough to create a storm. Risk adversity and the lack of sustainable funds are the main reasons that explains the non-existence. The closest lot would have to be the brave few who prowled and leapt into the tiger’s den when it appeared.
One of such companies, Finance U.K. Ltd, took clear advantage of the bubble that built as early as 2005. It was unusual of a non-US based market player to be positioned in the far lands of U.K. and yet take such close watch on the domestic affairs of the U.S. The trend by small players on such unorthodox methods of investing can somewhat be understandably apprehended but to conceive and enlarge the spectrum of focus on a much larger scale with deep-pocketed bank accounts is unimaginable. During the Brexit panic when 2 trillion was wiped off world markets, Finance U.K. ended up with an enormous profit, returning a 37.5% gain via currency speculative moves.
Its modest 14 years, incidentally also began during the subprime mortgage era, saw Finance U.K. Ltd plant a prominent flag on the global map. Till this day, companies like Finance U.K. Ltd are a scarcity.
“We’ve, apart from being able to precisely identify probable points of entry into the market, put in place strategic first-in advantage, funds wise. There is also this geographical advantage of our presence worldwide that we are able to return a good profit, quickly and swiftly enough. Our unique trading methodologies are proven good tools for our trading desks thus far and we shall continue to pursue relentless in this direction”, said of Chief Investment Officer Peter Oser.
Unnerving as some may say, contrary to theories of efficient market hypothesis where supposedly assets are reflective of their true values, in modern-day financial economics, more and more investment principles mark out the disequilibrium apparently. Reflexivity plays a bigger role in the sizing up of an investment opportunity, especially in the existence of gravitated effect of more trending-following habits of investors & risk adversity. In these times where the outlook from every firm and bank reveals gloominess amidst the investment landscape, whether or not there will be more of successful companies like Finance U.K. remains to be seen.
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