Summary of "The 3 Trades Billionaires Make Before Every Market Crash (And They’re Doing Them Again)"

Summary of Finance-Specific Content

The video outlines a historical, mechanical playbook followed by billionaires and top investors before every major market crash over the past century. This playbook consists of three core trades, currently being executed again in 2025, signaling a market crash likely within 12 to 18 months.

Key Trades Before Every Market Crash

1. Trade One: Convert to Cash (12-18 months before crash)

Recognize extreme market valuations and excessive leverage.
Systematically reduce equity exposure and raise cash to preserve capital.

Historical examples:

Joseph Kennedy in 1929: Sold stocks steadily before the crash; Dow peaked at 381 on Sept 3, 1929.
Paul Tudor Jones in 1987: Reduced stock holdings by September; Dow peaked at 2,722 on Oct 2, 1987.
Michael Burry, John Paulson, Warren Buffett in 2007-2008: Raised cash, avoided overvalued stocks.

Current (2025) indicators:

Warren Buffett holds $325 billion in cash (largest corporate cash hoard ever).
Buffett cut Apple (AAPL) and Bank of America (BAC) positions.
Insider selling at levels not seen since 2007: Jeff Bezos sold $13B Amazon (AMZN), Mark Zuckerberg sold Meta (META), Jamie Dimon sold JPMorgan Chase (JPM) stock.

Market valuations are extreme:

S&P 500 P/E ~28 (historical average 15-17).
Seven mega-cap stocks (AAPL, MSFT, NVDA, AMZN, GOOGL, META, TSLA) make up ~30% of S&P 500 market cap.
Nvidia (NVDA) trades at P/E >65, valued over $3 trillion, more than entire German stock market.
Real estate overvalued 50% above trend (vs 35% in 2008 bubble).
Commercial real estate vacancy rates high (e.g., 45% office vacancy, 35% in San Francisco).
Federal debt >$36 trillion; interest payments >$1.2 trillion/year (largest federal budget item).

2. Trade Two: Accumulate Gold (Simultaneous with cash conversion)

Hedge against currency debasement and inflation as central banks print money post-crash.
Physical gold (not mining stocks) is preferred.

Historical examples:

Kennedy and Bernard Baruch bought gold after 1929 crash; gold rose 70% after 1933 dollar devaluation.
2008: Paulson and others accumulated gold; price rose from ~$700/oz to $1,900/oz by 2011 (+170%).

Current (2025) indicators:

Central banks (China, Russia, Turkey, India, Poland, Singapore) buying gold aggressively.
Over 1,000 tons added to reserves annually in 2022, 2023, and 2024 (highest since 1967).

This signals expectation of massive money printing and inflation in a future crash.

3. Trade Three: Volatility Bet (6-12 months before crash)

Position to profit from market declines via:
- Short positions
- Put options on indexes (e.g., SPY)
- Credit default swaps (CDS) on bonds

Historical examples:

Jesse Livermore in 1929: Built large short positions, made ~$100-$140 million (equivalent to $2B+ today).
Paul Tudor Jones in 1987: Bought put options expiring in Oct-Nov; made $100 million on Black Monday (Oct 19, 1987) when market dropped 22.6%.
Michael Burry and John Paulson in 2008: Bought CDS on subprime mortgage bonds; Paulson’s fund made $15 billion.
Bill Ackman in March 2020: Bought CDS on corporate bonds before COVID crash; made $2.6 billion.

Current (2025) indicators:

Hedge funds accumulating put options and CDS at levels not seen since before 2008.
CBOE Volatility Index (VIX) shows unusual activity signaling expected market drop.
Bill Ackman vocal about risks in commercial real estate, government debt, and regional banks.

Additional Framework: The Four-Phase Crash Cycle

Phase 1: Recognition Investors exit overvalued assets, raise cash.
Phase 2: Preservation Hold cash and gold to protect against market losses and currency debasement.
Phase 3: Profit Use volatility instruments to profit from market declines.
Phase 4 (Implicit): Deployment After crash, use cash and profits to buy assets at distressed prices, generating generational wealth.
- Kennedy bought depressed assets post-1929.
- Buffett invested $5B in Goldman Sachs in 2008 at peak panic, turning it into $12B.
- Ackman reinvested March 2020 profits into stocks at bottom.

Macroeconomic & Market Context (2025)

Market valuations at historic extremes similar to 1929 and 2000.
Concentration risk: Top 7 stocks dominate S&P 500.
Real estate bubble worse than 2008 housing bubble.
Commercial real estate crisis underway due to high vacancy and refinancing at much higher interest rates.
Federal debt and interest costs unsustainable; policy responses (spending cuts, tax hikes, or money printing) all lead to recession or inflation.
System fragile; any trigger (bank failure, real estate default, geopolitical crisis, recession) could ignite the crash cascade.
Timeline: Crash expected late 2025 to mid-2026, possibly sooner.

Practical Recommendations for Individual Investors

Trade One: Reduce equity exposure from 60-70% to 30-40%; hold rest in cash or short-term Treasuries.
Trade Two: Allocate 5-10% of portfolio to physical gold or gold ETFs (avoid gold mining stocks).
Trade Three: Buy put options on SPY with 6-12 month expirations, strike prices 10-20% below current levels; expect to pay 1-3% of portfolio as premium (insurance).
Prepare psychologically to buy quality companies with strong balance sheets and essential products when markets fall 50-70%.
Understand that the hardest part is buying when fear is at maximum.

Disclaimers and Notes

The video emphasizes this is not financial advice, but pattern recognition based on historical evidence. The trades are mechanical and repeat because crashes follow similar sequences. Most investors lack capital or access to institutional instruments like CDS but can implement simplified versions. The video warns of widespread denial and complacency among retail investors, which historically leads to large losses.

Mentioned Tickers, Assets, and Instruments

Stocks: Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Google (GOOGL), Meta (META), Tesla (TSLA), Bank of America (BAC), Goldman Sachs (GS), JPMorgan Chase (JPM)
Indices & ETFs: S&P 500, SPY (S&P 500 ETF)
Instruments: Cash, physical gold, gold ETFs, put options, credit default swaps (CDS)
Macro Assets: Real estate (residential and commercial)
Economic indicators: Price to earnings ratios, margin debt, federal debt and interest payments, VIX (CBOE Volatility Index)

Presenters / Sources

Historical figures referenced include:

Joseph Kennedy
Paul Tudor Jones
Michael Burry
John Paulson
Jesse Livermore
Bernard Baruch
Bill Ackman
Warren Buffett
Jeff Bezos
Mark Zuckerberg
Jamie Dimon

The video narrator/creator is unnamed but references these investors and historical data extensively.

Summary

The video argues that the same three trades—raising cash, buying gold, and buying volatility protection—are being executed by the smartest investors in 2025, signaling an imminent market crash within 12-18 months, with a fourth trade of buying at the bottom to follow.