The Crash Profit Pattern: How the Same Investors Made Billions in 1929, 2008, and Will Again

About this video

• Video Title: The Crash Profit Pattern: How the Same Investors Made Billions in 1929, 2008, and Will Again
• Channel: Economy Rewind
• Speakers: None explicitly named in the transcript.
• Duration: 00:28:38

Overview

This video explains a recurring four-stage pattern that investors follow during market cycles, leading to significant profits during crashes. It highlights how certain investors profited in 1929 and 2008 by executing these stages and suggests the same pattern is unfolding in 2025. The video outlines these stages: exiting the market before a crash, buying volatility insurance, shorting specific vulnerable sectors, and finally, buying assets at fire-sale prices during maximum fear.

Key takeaways

• The Four-Stage Crash Pattern: A predictable sequence of investor actions occurs during market extremes: exiting before a crash, buying protection, shorting vulnerable assets, and buying at the bottom.
• Historical Precedents: Investors like Joseph Kennedy in 1929 and Michael Bur and John Paulson in 2008 successfully utilized this pattern to generate billions.
• Current Market Indicators (2025): The video points to actions by prominent investors and financial indicators (insider selling, cash reserves, elevated put options, VIX calls, CDS on commercial real estate, regional bank exposure) as evidence that Stage 1 (exit) is complete and Stage 3 (shorting specific sectors) is underway.
• Stage 1: Exit: Sophisticated investors liquidate positions when markets are overvalued, even if the exact timing of a crash is unknown. Examples include Warren Buffett holding large amounts of cash and major tech CEOs selling stock.
• Stage 2: Volatility Insurance: Investors buy protection (put options, VIX calls, credit default swaps) at low volatility periods before a crash becomes apparent.
• Stage 3: Short Specific Sectors: Identifying and actively betting against the most vulnerable industries (currently commercial real estate and regional banks) for maximum profit during a downturn.
• Stage 4: Buy at Maximum Fear: The culmination where investors with cash deploy it to buy assets at heavily discounted prices during periods of extreme panic and pessimism, creating generational wealth.
• Preparation for Retail Investors: While not all stages are executable by everyone, understanding the pattern allows for preparation, such as holding more cash and considering protective measures like buying put options.