The stock market is a volatile place that requires patience, risk tolerance, and thorough research. And those who make it to the top of Wall Street are also likely to be among the richest people in the world. Today's top investors share a strategy for financial success: They all took calculated, high stakes risks in hedge funds. Here are Wall Street's six highest earners and the hedge funds they manage.

1. John Paulson

Unlike most people, Paulson has benefited from the mortgage crisis. Back in 2006, he was already predicting the crash of the housing market. He created two hedge funds dedicated to betting against subprime mortgages. His forward-thinking led his company to perform at the top since 2007. He posted $5 billion in returns in 2010.

Paulson is considered to be the number one investor on Wall Street. He formed his own hedge fund in 1994, leaving behind a career as a banker for Bear Sterns.

2. Warren Buffett

In 2008, Buffett was the richest man in the world with a net worth of $62 billion. He was demoted to second place in 2009 when his company, Berkshire Hathaway, lost $25 billion in the span of a year. He was at number three by 2010, outdone by Carlos Slim Helu and Bill Gates, even though his investments were up by $10 billion.

Despite that slight downturn in fortune, Buffett is still considered one of the greatest investors of all time. His nickname is the "Oracle of Omaha" in reference to his Nebraska hometown and his insightful investment choices, such as not putting money into the initial Internet boom.

3. James Simons

This mathematician turned hedge fund manager was worth $10.6 billion in 2011. He founded the hedge fund Renaissance Technologies LLC in the early 80s after teaching at Harvard, cracking codes for the U.S. Defense Department, and earning a Ph.D. from UC Berkeley. The key to his success has been to use trading algorithms and computers to determine the best investments.

Simons stepped down from day-to-day operations at Renaissance in 2009, but at 72, he keeps busy by devoting his time to supporting autism research and providing stipends to New York City math teachers through his Math for America non-profit organization.

4. Ray Dalio

This 61-year-old is the founder, CEO, and CIO of Bridgewater Associates, the world's largest hedge fund. Many credit his untraditional management approach, which calls for complete honesty, accountability, and transparency from himself and all of his employees, as his secret to success. He made a personal profit of $3 million in 2010 with his company boasting a 45% return on investments for a $15 million windfall.

Dalio made his first investment at age 12, investing $300 into stock in Northeast Airlines. The no-nonsense hedge fund manager has an M.B.A. from Harvard Business School.

5. Carl Icahn

Icahn recently made news when he returned $1.76 billion to outside investors with the warning that another market meltdown might be waiting in the wings. Some wonder if his motives for returning the money are as noble as they were portrayed. One theory is that he returned the money to avoid new regulations that are being made on hedge funds that have outside investors. Heightened scrutiny might not be worth it to Icahn since outside investments make up only 25% of his fund's profits.

Ironically, Icahn is a college dropout. He left New York University before completing his coursework, but he eventually went on to earn a degree from Princeton University. His trademark is buying out fledging companies and turning them around. His network is $12.5 billion as of 2011.

6. Dan Loeb

The New Yorker called him the "Angry Investor" in 2005. His specialty is writing no-holds-barred letters to the CEOs of companies that he is invested in when he feels they aren't bringing him big enough returns. He often goes as far as to demand people lose their jobs. Loeb graduated from Columbia University with a degree in economics. His hedge fund is called Third Point Management, a reference to his passion for surfing.

The Bottom Line

Wall Street is not a place for the faint of heart. There is no room for caution in the world of hedge funds, where the highest-paid people are those who take the biggest risks and have the boldest personalities.