A huge institutional investor is poised to make a fortune if markets plunge. The biggest hedge fund in the world—Ray Dalio’s Bridgewater—has reportedly placed a $1 bn+ bet that stocks will tumble. Using Goldman Sachs and Morgan Stanley, the firm has been building up the bearish position for months. The bet wagers that stocks will fall sharply by March and will pay off if either the S&P 500 or the Euro Stoxx 50 moves lower. Bridgewater reportedly paid $1.5 bn for the options contracts, roughly 1% of their AUM.
FINSUM: This is a huge bet. Normally you could argue that this might just be a hedge, but the size of the position makes it seem much more like a gamble than a hedge.