The crash of 2008 will forever be remembered as the debt bubble to end debt bubbles. The economy didnt just come to a standstill. Instead the entire financial system crashed. At this point it is still to early to tell if it will survive in anything close to its state of the past several years as we still have problems and there are hundreds if not thousands of potential laws that can jack the system up and drive us into socialism.

So how did the global macro investor fare through all of this? Surprisingly to people that don't understand global macro, it came out shining like the star that it is. According to Tremont Advisors global macro came out with an average return of over 4%. You might be saying that 4% is no big deal but in 2008 there was not one single traditional mutual fund that was positive on earth. Out of about 20,000 funds not a single one was positive for the year. Talk about wealth destruction. In fact the world lost over 40% of its wealth over that time period as equity investors, fixed income, commodity, and currency investors, real estate investors, and pretty much every investor on earth lost a cool 40%+ of their net worth as they saw the value of their holding drop like the proverbial rock.

When most investment managers were stuck in losing long trades the global macro investors were mostly short junk and long gold. While that was written a bit tongue in cheek it is also a bit literal as gold performed quite well. Many macro funds were long US Treasuries, the US Dollar, and Gold. Unsurprisingly enough these were the only assets that did well. Other managers were long oil into the summer and then some time after went short the energy complex as they saw fleeting demand and ample supply.

Another trade that many macro investors caught was that of shorting the housing market. Using different derivative products many macro investors made huge returns all the while taking minimal risk. As we have stated before and will state again macro investors look for the best risk adjusted returns and not just the best reward. If you need to risk 50% to make 10% the risk outweighs the reward 5 to 1 which are worse odds then most games in Vegas. Essentially as excellent risk managers global macro investors are able to find great opportunities by first focusing on the downside and then looking to the upside.

The crash of 2008 will be studied for years and years to come as investors try and figure out what went wrong, why, and how to fix and profit from it. In fact there have already been dozens of books written about the crash, this all the while during the ongoing bear market.