10 Biggest Losers In Finance

Rogue trading makes headlines. The idea of a single person losing millions and occasionally billions of dollars is always interesting, but it is even more so when that person is losing other people's money. In this slideshow, we look at 10 traders and fund managers that became famous for their very public losses.

In 1994, John Meriwether founded the Long-Term Capital Management (LTCM) hedge fund, which managed more than $100 billion in assets. LTCM attracted investors with their promising arbitrage strategy that could theoretically reduce the risk level to zero. In 1998, LTCM made a bet that the troubled Russian financial markets would revert back to normal, and took a large, unhedged position Russian debt. The fund ultimately collapsed when Russia defaulted on its debt.

Fears of a larger financial crisis spurred the U.S. federal government to step in with a $3.65 billion bailout loan once LTCM's losses reached $4 billion. This allowed LTCM to liquidate in an orderly manner in early 2000.

Julian Robertson is one of the few losers who also made the greatest investors list. He started the hedge fund firm Tiger Management in 1980. Between 1980 and 1996, he turned an $8 million investment into $7.2 billion. Between 1998 to 2000, Robertson failed to participate in the tech-stock craze (or tech bubble), which he deemed irrational. A value investor, Robertson placed big bets on stocks through a strategy that involved buying what he believed to be the most promising stocks, and shorting stocks he viewed as the worst.
When Robertson shorted tech stocks during the tech bubble, the greater fool theory prevailed and tech stocks continued to soar. As a result, Tiger Management suffered massive losses, with all funds closing in 2000 at a value of $6 billion (previously worth $23 billion in 1998).