Transcription
In 1929, Joseph Kennedy made three specific trades six months before the crash. He converted to cash. He bought gold. He positioned for volatility. When the market fell 89%, Kennedy made $50 million while everyone else lost everything.
In 1987, Paul Tudtor Jones made the same three trades: cash, gold, volatility. On October 19th, when the market fell 22.6% in a single day, Jones made $100 million in that one day alone.
In 2008, Michael Burray, John Pollson, and others made the same three trades: cash, gold, volatility. They made billions while the financial system collapsed.
And right now, in 2025, Warren Buffett, Ray Dalio, and Bill Aman are making the exact same three trades. Not two trades, not five trades, three. The same three that have worked before every major crash in the last century. These aren't random strategies. This isn't luck. This is a mechanical pattern that repeats because crashes follow the same sequence: extreme valuations, excessive leverage, a triggering event, forced liquidation, panic. And the investors who see it coming make the same three trades every single time.
Let me show you exactly what these three trades are, how they've played out in 1929, 1987, 2008, and why they're happening right now in 2025. Because understanding this pattern gives you a choice. You can ignore it and hold through the crash like most people do, losing 30 to 50% or more. Or you can recognize where we are in the cycle and position accordingly. The three trades have been made. The pattern is repeating and the crash is coming.
Let me start with why these three trades specifically. Why not four trades? Why not 10 different strategies? Because crashes follow a predictable mechanical sequence. And these three trades address each phase of that sequence.
The first phase is the recognition phase. Smart money realizes that valuations have become unsustainable. Risk now exceeds potential reward. This is when you exit, convert positions to cash, preserve capital, get out before the crash.
The second phase is the wealth preservation phase. While sitting in cash, you're exposed to inflation and currency devaluation. So you hold gold or other hard assets that maintain purchasing power when fiat currencies and financial assets collapse.
The third phase is the profit phase. You don't just preserve wealth, you profit from the collapse itself. This requires volatility instruments, short positions, put options, credit default swaps, bets that pay off when markets crash.
These three trades, executed together, create the perfect positioning. Trade one protects you from losses. Trade two protects you from inflation and currency risk. Trade three makes you money from the crash itself. And then after all three trades pay off, there's an implicit fourth trade that I'll discuss later: buying at the bottom with the cash you preserved and the profits you made.
But first, let me show you how the three trades have played out across four different crashes spanning nearly 100 years.
Trade number one is the cash conversion. This happens 12 to 18 months before the crash. It's the earliest signal, the recognition that markets have reached unsustainable valuations and the smart money is exiting. Let me show you how this played out across all four crashes.
1929, Joseph Kennedy was one of the most aggressive stock speculators of the roaring 20s. He'd made millions running stock pools, coordinated buying schemes that manipulated prices upward so insiders could sell at the top. By early 1929, Kennedy controlled significant positions across multiple stocks. The market was euphoric. Stocks had tripled in 5 years. Everyone was buying. Margin debt was at record levels. Investors borrowing 90% of stock value to buy more stocks. But Kennedy recognized the danger. He understood that when everyone is leveraged and fully invested, there's nobody left to buy. And without new buyers, prices fall. When prices fall even slightly, leveraged investors face margin calls. They're forced to sell. That selling drives prices lower, triggering more margin calls, creating a death spiral. Kennedy knew this pattern. So, in the summer of 1929, Kennedy began systematically converting his stock positions to cash. Not all at once because that would move markets and get him poor prices, but steadily over several months. By September, Kennedy was substantially in cash. The Dow Jones peaked on September 3rd at 381. The crash began October 24th, Black Thursday, 7 weeks after Kennedy had exited. While ordinary investors held their stocks all the way down, watching their wealth evaporate, Kennedy sat in cash, protected, ready for the next trade.
1987, Paul Tudtor Jones ran a hedge fund that had been successful trading commodities and stocks. But by mid 1987, Jones became deeply concerned about market valuations. The Dow had risen from under 1,000 in 1982 to over 2400 by August 1987. A 140% gain in 5 years. Price to earnings ratios were elevated. Margin debt was surging. And a new phenomenon called program trading, where computers executed massive trades automatically, was creating instability. Jones did the math. He concluded a crash was inevitable within months. In August and early September 1987, Jones systematically reduced his long stock positions. He converted to cash. He wrote memos to his investors explaining that he expected a major crash by October. This wasn't a vague prediction. He was specific. October. He raised cash throughout September. By early October, Jones's fund was substantially in cash and positioned for the next two trades. The market peaked October 2nd at 2722. The crash came October 19th, 17 days later. Jones was already out.
2008. This one is more complex because multiple investors recognized the housing bubble at different times. Michael Bur started converting to a defensive position in 2005. He'd been running a fund that invested in undervalued stocks, but his research into subprime mortgages convinced him the entire financial system was going to collapse. So Bur stopped investing in stocks. He raised cash. And he held that cash while preparing for trade two and trade three. John Pollson came to the same conclusion in 2006. He saw the housing bubble. He knew it would destroy the banks. So Pollson launched a dedicated fund to bet against the housing market. That meant raising cash from investors specifically for that purpose. Warren Buffett, always the most conservative, had been raising cash since 2006. Berkshire Hathaway. His cash position grew from 40 billion in 2006 to over 60 billion by 2007. Buffett couldn't find anything worth buying at current prices. Translation: valuations are too high. The market peaked in October 2007. By then, Bur, Pollson, Buffett, and others were substantially in cash. The crash accelerated through 2008. They were protected.
Now 2025. Warren Buffett is sitting on $325 billion in cash. Let me repeat that. 325 billion. That is the largest cash position in corporate history, in absolute terms and as a percentage of Berkshire's assets. Buffett has been systematically selling stocks to raise this cash. He reduced his Apple position by 50%. He's been selling Bank of America shares. He's not buying anything. In his 2024 shareholder letter, Buffett said explicitly, "He cannot find anything attractively priced." That's code. Everything is overvalued. Get out. But it's not just Buffett. Jeff Bezos has sold over 13 billion in Amazon stock in 2024 and 2025. Mark Zuckerberg has sold billions in Meta Shares, even as Meta hit all-time highs. Jaime Diamond, CEO of JP Morgan Chase, sold stock for the first time ever in his tenure as CEO. Insider selling across corporate America is at levels not seen since 2007. These are the people running the companies. They see the real financials, the real customer data, the real problems, and they're converting to cash. Trade one is happening right now. The smart money is out. This is the exact same pattern as 1929, 1987, and 2008. Systematic exit 12 to 18 months before the crash.
Trade number two is gold accumulation. This happens during the same 12 to 24-month window as trade one. And while you're sitting in cash, you need protection against currency devaluation and inflation. Gold is the 5,000-year solution. Let me show you how this played out.
1929. Bernard Baroo was one of the most successful investors of the early 20th century. He'd made fortunes in previous panics by recognizing bubbles early. In 1929, Baroo didn't just convert to cash. He converted substantial positions to gold, physical gold. He understood that the coming crash would lead to deflation initially, but eventual currency manipulation and inflation. Gold would preserve purchasing power. When the crash came, gold maintained its value at $20.67 per ounce, the official fixed price at the time. But more importantly, in 1934, when Roosevelt devalued the dollar by revaluing gold from $20 to $35 per ounce, anyone holding gold saw a 69% gain in dollar terms. Baroo had positioned perfectly. His gold holdings appreciated while stocks continued falling. By the mid 1930s, Baroo was wealthier than before the crash.
1987. Gold's role in this crash was different because 1987 was a one-day crash that recovered quickly. But the investors who bought gold in advance of the crash in 1986 and early 1987 still profited. Gold was around $300 per ounce in early 1987. During the October crash, gold spiked to $475 as investors fled to safety. A 58% gain, then it pulled back as markets stabilized. But the trade worked. Gold protected wealth during maximum panic. Paul Tudtor Jones held gold positions alongside his cash as part of his defensive positioning. It paid off.
2008. This is where trade 2 became extremely important. Gold was around $600 per ounce in 2007 when the smart money started positioning. As the financial crisis unfolded through 2007 and 2008, as banks failed and the Fed started printing money, gold surged. By March 2008, gold hit $1,000. By 2009, it was over 1,200. It eventually peaked at 1,900 in 2011. John Paulson, after making billions from trade three, shorting mortgages, deployed substantial capital into gold. He understood that the Fed's response to the crisis would be massive money printing. And money printing means currency devaluation. And currency devaluation means gold appreciation. Pollson's gold fund made billions more on top of his mortgage short gains. The investors who held gold from 2007 through 2011 tripled their money while stocks went nowhere.
2025. This is where trade 2 becomes absolutely critical and it's happening right now at unprecedented scale. Central banks globally have been buying gold at record rates. In 2022, 2023, and 2024, central banks purchased over 3,000 tons of gold, the highest three-year total since data collection began in 1950. China has been buying. Russia has been buying. India, Turkey, Poland, Singapore, all accumulating gold. They're diversifying away from dollars. They see the same thing the smart money sees: unsustainable US debt, inevitable currency devaluation. Gold is protection. And it's not just central banks. Billionaire investors are accumulating. Ray Dalio has been vocal about holding 5 to 10% of portfolios in gold. Stanley Ducken Miller has disclosed significant gold positions. Even Paul Tudtor Jones has said publicly he owns gold as a hedge against inflation and currency debasement. Gold is currently trading around $4,50 per ounce, record highs. Why? Because Smart Money is executing trade 2 right now. They've converted to cash in trade one. Now they're converting a portion of that cash to gold for wealth preservation. When the crash comes, when the Fed responds with unlimited money printing, when the dollar devalues 20 to 30%, gold will surge 5,000, 6,000, maybe 10,000 per ounce. The investors holding gold will preserve purchasing power while everyone else holding dollars or dollar denominated bonds gets destroyed. Trade two is active. Gold accumulation is happening at scale right now.
Trade number three is the volatility bet. This is the profit trade. Trade one protects you. Trade two preserves wealth. Trade three makes you rich. This happened 6 to 12 months before the crash. And it requires instruments that pay off when markets collapse. Let me show you how this has worked.
1929. After Kennedy exited to cash and Baroo converted to gold, the next step was to profit from the inevitable decline. The instrument available in 1929 was shorting stocks. Kennedy established short positions in multiple stocks through late summer and early fall 1929. Shorting means borrowing shares, selling them at current prices, and hoping to buy them back cheaper later. Kennedy was paying borrowing costs while stocks continued rising through September. But he understood the trade. When the crash came in October, stocks fell 30% in days, 50% within weeks. Kennedy covered his shorts, buying back shares at collapsed prices and returning them to the lender. The difference was his profit. Estimates based on Kennedy's known wealth accumulation suggest he made 15 to $50 million from his short positions. That's equivalent to several hundred million today. This is trade three paying off. He risked premium payments while stocks rose. He collected massive profits when they crashed.
1987. Paul Tudtor Jones's trade three was legendary. And we know the details because a documentary crew was filming him during this period. After raising cash and buying gold, Jones bought massive positions in put options on stock index futures. Put options give you the right to sell at a predetermined price. If you buy puts with a strike price of 2500 on the S&P when the market is at 2700 and the market crashes to 2000, your puts are worth 500 points of profit per contract. Jones bought thousands of contracts. He spent millions in premium and he waited. The market crashed October 19th, 1987. The Dow fell 508 points, 22.6%. The largest single day percentage decline in history. Jones's put options exploded in value. He made $100 million that day. His fund was up 62% in October alone. The documentary captured him on the phone executing trades, making millions in real time. It's the most perfect execution of trade three ever filmed. And the pattern was identical to Kennedy's approach: pay premium while waiting, collect massive profits when volatility spikes.
2008. Michael Bur and John Pollson's trade three is now famous from the book and movie The Big Short. But let me give you the mechanics because this is important. Bur couldn't short subprime mortgages directly. The instruments didn't exist. So he worked with Goldman Sachs and other banks to create credit default swaps on mortgage bonds. These are essentially insurance contracts. Bur paid premiums roughly 2 to 4% per year on the notional amount insured. If he bought $100 million in insurance, he paid $2 to $4 million per year. If the bonds didn't default, he lost the premium. If they defaulted, he collected the full insured amount. From 2005 through 2007, Bur paid these premiums. His investors were furious. They thought he'd lost his mind. The housing market kept rising. He was losing money every month. But Bur understood trade three. In 2007, subprime defaults started rising. By early 2008, the bonds Bur had insured began defaulting. The credit default swaps paid out. Contracts Bur bought for a few million in premiums paid out hundreds of millions when the bonds went to zero. His fund made over $700 million. John Pollson executed the same trade on a larger scale. His funds bought tens of billions in credit default swaps. When the housing market collapsed, Paulson collected $15 billion dollars in payouts, $20 billion across all his funds. He personally made four billion. This is trade three at maximum scale: years of premium payments, then the biggest payout in hedge fund history.
2025. Trade three is happening right now and the instruments are credit default swaps on commercial mortgage-backed securities, put options on stocks and indices, and VIX call options. Let me show you the evidence. Credit default swaps on commercial real estate securities have spiked in price. The cost to insure against defaults in commercial mortgages has increased 300 to 500% since 2021. Why? Because sophisticated investors believe commercial real estate will collapse. Office buildings sitting 40 to 50% vacant due to permanent remote work. Mortgages maturing at 3% interest rates that must be refinanced at 8%. The math doesn't work. Defaults are inevitable. The investors buying these credit default swaps are paying elevated premiums now. But when the defaults cascade through 2025 and 2026, these swaps will pay out massively, just like the subprime swaps in 2008. Put options on major indices, the S&P 500, the NASDAQ, have seen unusual activity. Large institutional purchases of put options expiring in late 2025 and 2026. These are bets that markets will crash during that window. The put-call ratio, which measures volume of puts relative to calls, has been elevated above one. More puts than calls being bought. This indicates institutional hedging. Institutions buying insurance, they're executing trade three. VIX call options are another signal. The VIX measures market volatility. It spikes during crashes. Buying VIX calls is betting that volatility will explode. There have been large purchases of VIX calls expiring throughout 2025. Bill Aman has discussed publicly that he's considering hedges similar to his March 2020 trade when he turned $27 million into $2.6 billion in weeks. He hasn't disclosed exact positions, but he's signaling that trade 3 is active.
The pattern is undeniable. Across 1929, 1987, 2008, and now 2025, the same three trades happen in sequence. Trade one: convert to cash 12 to 18 months before. Trade two: accumulate gold for wealth preservation. Trade three: buy volatility instruments that pay when markets crash. These aren't random strategies. They're mechanical responses to the same setup: extreme valuations, excessive leverage, an inevitable triggering event that forces liquidation and creates panic. And the investors who recognize this pattern execute the same three trades every single time.
Now, let me show you why these three trades work by explaining the mechanics of crashes. Every major crash follows the same sequence. It starts with a bubble. Asset prices rise to levels disconnected from fundamentals. In 1929, stocks traded at absurd multiples. In 1987, valuations were stretched and margin debt was high. In 2008, housing prices doubled in 5 years based on fraudulent lending. In 2025, the Buffet indicator is at 185%. Stocks are valued at almost twice GDP. Historic extremes.
The second stage is euphoria. Everyone believes prices will keep rising. In 1929, stock tips from shoe shine boys. In 1987, program trading was seen as the secret to endless gains. In 2008, everyone believed housing prices never fall nationally. In 2025, artificial intelligence is the narrative. AI will change everything. Valuations don't matter, just buy.
The third stage is maximum leverage. When prices are rising, leverage amplifies gains, so everyone borrows to buy more. In 1929, 90% margin debt. In 1987, portfolio insurance and program trading created synthetic leverage. In 2008, subprime mortgages and derivatives created 50 to 1 leverage in the financial system. In 2025, margin debt is near record highs. Leverage everywhere.
The fourth stage is the trigger. Something causes a small decline. In 1929, it was the Hatri fraud in London. In 1987, it was rising interest rates and program trading malfunction. In 2008, it was subprime defaults. In 2025, it could be commercial real estate defaults, a geopolitical shock, a major tech company collapse. The specific trigger doesn't matter. What matters is that the trigger starts stage five.
Stage five is forced liquidation. When leveraged investors face losses, they get margin calls. They're forced to sell. That selling drives prices lower, which triggers more margin calls, more forced selling. This creates a cascade, a death spiral. Prices fall not because of fundamentals, but because of mechanical forced selling. This is why crashes happen so fast. It's not gradual. It's a liquidation wave.
Stage six is panic. Fear takes over. Everyone sells. It doesn't matter what they own. They just want out. Liquidity disappears. Bids vanish. Prices gap down violently. The VIX spikes to 50, 60, 70. Markets fall 20, 30, 40% in weeks. This is the crash. And this is when the three trades pay off.
Trade one, cash, means you're not being liquidated. You're not forced to sell. You're protected.
Trade two, gold, means you're not holding depreciating cash when the Fed starts printing money to bail out the system. You're preserving wealth.
Trade three, volatility instruments, means you're profiting from the crash itself. Your puts, your credit default swaps, your VIX calls, they explode in value when everyone else is losing everything.
The three trades address every phase of the crash sequence and that's why they work every single time.
So, where are we right now in 2025? We're in late stage positioning. Trade one is substantially complete. The smart money has raised record cash. Buffett's $325 billion. Insider selling at 2007 levels. They're out. Trade 2 is accelerating. Central banks buying 3,000 tons of gold in three years. Gold at $4,50. Record highs. The wealth preservation trade is happening. Trade 3 is being established. Credit default swaps on commercial real estate spiking in price. Put options being purchased by institutions. VIX call activity. The volatility bets are being placed. The three trades are active, which means we are 12 to 18 months before the crash.
Based on the historical pattern, the crash arrives late 2025 or 2026. Could be sooner if a trigger event accelerates the timeline. Could be slightly later if markets remain irrational longer. But the window is clear. Within 18 months, the crash is coming. And when it comes, when the S&P falls from current levels around 6,600 to 3500 or lower, when commercial real estate collapses, when regional banks fail in clusters, when unemployment spikes from 4% to 9%, the three trades will pay off. The investors in cash will have capital to deploy at the bottom. The investors holding gold will have preserved purchasing power while the dollar devalues. The investors who bought volatility instruments will collect massive payouts as their puts and swaps explode in value.
And then comes the implicit fourth trade. After the three trades pay off, after you've preserved capital, protected wealth, and profited from the crash, you deploy everything at maximum fear. You buy stocks when they're down 50%. You buy real estate when it's being foreclosed. You buy businesses when they are being liquidated. This is what Kennedy did after the 1929 crash. This is what Buffett did in 2008, investing $5 billion in Goldman Sachs at the absolute bottom. This is what Aman did in March 2020, using his $2.6 billion payout to buy stocks at crashed prices. The fourth trade, buying at the bottom, creates generational wealth. But you can only execute the fourth trade if you successfully executed trades one, two, and three first.
So, what should you do? Most people can't execute this pattern perfectly. They don't have hundreds of millions in capital. They don't have access to institutional-grade credit default swaps. But understanding the pattern gives you enormous advantage. You can execute simplified versions of the three trades.
Trade one, raise cash. If you're currently 60 to 70% invested in stocks, reduce to 40%. Hold the difference in cash or short-term treasury bills. Yes, you might miss some gains if markets keep rising, but when the crash comes, you'll have 30% of your portfolio protected. And that 30% becomes buying power at the bottom.
Trade two, buy gold. 5 to 10% of your portfolio in physical gold or gold ETFs, not gold mining stocks, physical gold allocated storage if possible. When the crash comes and the Fed prints unlimited money, gold will surge. This preserves purchasing power.
Trade three, buy protection. You can buy put options on SPY, the S&P 500 ETF. This isn't complicated. Buy puts expiring in 6 to 12 months with strike prices 10 to 20% below current levels. You'll pay 1 to 3% of your portfolio value. If markets crash, those puts could return 5 to 10 times what you paid. If markets don't crash, you lose the premium. But that's insurance. You pay for protection, hoping you never need it.
The most important thing is psychological preparation. When the crash comes, when markets are down 40 to 50%, when every headline predicts the end of capitalism, when unemployment is spiking and banks are failing, you have to be ready to act. You have to have a list of quality companies you want to own. Companies with strong balance sheets, low debt, products people will always need. Apple, Microsoft, Visa, Johnson and Johnson, Proctor and Gamble. Quality companies that will survive and thrive. When these companies are on sale at 50% off, you buy with the cash you protected in trade one, with the purchasing power you preserved in trade two, with the profits you made in trade three. You buy aggressively when everyone else is paralyzed by fear. This is the hardest part. Not the technical execution of the three trades, but having the courage to buy when it feels like the world is ending. That psychological fortitude separates the investors who get rich from crashes from the investors who lose everything. Kennedy had it. Baroo had it. Paul Tudtor Jones had it. Bur, Paulson, Buffett, Aman, they all had it. The willingness to act when fear is maximum. That's the real secret.
Let me give you the timeline based on the pattern. We are in month 12 to 18 before the crash right now. That puts the crash window at late 2025 or first half 2026. Could be sooner, could be slightly later, but within that window, the three trades are already active. Cash is being raised, gold is being accumulated, volatility bets are being placed, the smart money is positioned. When the trigger event happens, when commercial real estate defaults cascade or a major bank fails or a geopolitical crisis erupts, the crash will accelerate quickly. Markets will fall 20 to 30% in weeks, then another 20 to 30% over several months. The bottom will arrive when panic is maximum, probably mid to late 2026. Unemployment will hit 9 to 10%. The S&P will bottom around 3500. Bitcoin will fall to 20,000 or lower. Gold will surge to 5,000 or higher as the Fed prints unlimited money. That bottom, that maximum fear moment, that's when the fourth trade happens. That's when you deploy all the capital you protected and all the profits you made and you buy everything quality at fire sale prices. Then you hold for 5 to 10 years while markets recover and your positions triple or quadruple. That's the full pattern. Four trades across 18 to 36 months. Executed correctly, it creates generational wealth.
Here's the bottom line. The three trades aren't secret. They're not insider information. They're a documented historical pattern that repeats because crashes follow the same mechanical sequence: extreme valuations, excessive leverage, a trigger, forced liquidation, panic. And the investors who see it coming make three trades: convert to cash, buy gold, bet on volatility. These trades have worked in 1929. They worked in 1987, they worked in 2008, and they're being executed right now in 2025 by the smartest investors in the world. Warren Buffett sitting on $325 billion in cash. That's trade one. Central banks buying 3,000 tons of gold. That's trade two. Hedge funds buying credit default swaps and put options. That's trade three. The pattern is playing out in real time. The only question is whether you'll recognize it and position accordingly or whether you will ignore it and hold through the crash, losing 30 to 50% or more of your wealth. Most people will ignore it. They always do. They'll believe this time is different. They'll believe AI changes everything. They'll believe the Fed will save markets. They'll believe valuations don't matter and they'll lose everything just like most people did in 1929, 1987, and 2008. But a small group will see the pattern. They'll execute simplified versions of the three trades. They'll protect capital, preserve wealth, and profit from the crash. And then they'll buy at the bottom and become wealthier than they ever imagined. The choice is yours. The three trades have been made. The pattern is repeating. The crash is coming. Position yourself accordingly.
If this video showed you a pattern you'd never seen before, if you understand now that the same three trades work before every crash, subscribe to this channel. Because over the next 12 to 18 months, I'll track every signal, every insider sale, every gold purchase by central banks, every spike in credit default swap prices, every warning sign that the crash is approaching. You'll see the pattern unfold in real time, and you'll know exactly when to execute the three trades if you haven't already. This is not financial advice. This is pattern recognition. The pattern has repeated four times in the last century: 1929, 1987, 2008, and now 2025. The three trades are the same. The sequence is the same. The outcome will be the same. Position yourself while you still can. Because when the crash comes, when it's already happening, it's too late. The trades have to be made before the crash. That's the whole point. And before the crashes right.