How Top Investors Made Money During the Market Plunge

As seen during the past couple weeks, stock market corrections can be brutal.
Even the world's top investors have suffered losses, such as Maverick
Capital's Lee Ainslie and Pershing Square's Bill Ackman. Actually, one of
the worst performers was John Paulson, whose flagship fund is down about 31% for
the year. Ouch! Despite all this, some funds actually have been able to post
gains. True, some are focused on bear strategies, like Universa Investments and
36 South Capital Advisors. But others pursue opportunistic strategies that is,
they try to make money in any environment. Examples include Ray Dalios
Bridgewater Associates and Bruce Kovners Caxton Associates. So, what did they do
that made the difference? What can we learn? Here are some takeaways: Hedging
Short selling proved to be crucial. This involves making money when a stock
drops. While it can be a risky strategy, it actually can provide overall safety
in a diversified portfolio. Keep in mind that, during a market plunge, stock
picking does not matter. Just about everything falls. Thus, having some
positions on the short side can be a great way to provide a good hedge.
Commodities Not long ago, this category was considered a fringe area. Then
again, there was a terrible bear market from 1980 to 2000. However, with the
emergence of economies like India, Brazil and China, there has been a huge
demand for commodities. And this is likely to continue for the long haul. At the
same time, gold has proven to be a resilient investment. During times of
uncertainty, it remains a go-to safe haven. Don't Be Greedy The temptation is
to hold onto a trade to maximize returns. Well, top investors realize that you
never will find the top or the bottom. So, if you have a position that has
spiked such as gold then it is a smart idea to sell into the strength. As the
old saying goes: You don't go broke taking profits. Tom Taulli is the author
of various books, including "All About Commodities" and "All About Short
Selling." You can find him at Twitter account @ttaulli . He does not own a
position in any of the stocks named here.