2008's smartest financial moves

In a year filled with blunders, scandals, billion-dollar losses and market chaos, we think these stars stood out for their brilliance.

downlevel description

This video requires the Adobe® Flash® Player. Download a free version of the player.

Article Tools

Rate this Article

Click on one of the stars below to rate this article from 1 (lowest) to 5 (highest) Low

High

E-mail us your comments on this article
View all top-rated articles

By Catherine Holahan, MSN Money

This is part two of a year-end wrap-up package. To read Part 1, on the year's most boneheaded moves, click here.

Bull markets treat ordinary executives like geniuses. It's the bear markets that separate the merely lucky from the truly extraordinary business leaders. The 2007-08 recession is doing just that: exposing the failings of once-celebrated managers and highlighting the overlooked talents of others.

It would be easy this year to focus exclusively on flagrant management missteps, of which there have been many. But that would forgo an opportunity. Just as we can learn from the sins of others, so, too, can we learn from their virtues.

7 financial virtues

So here is MSN Money's staff-generated list of the best money moves of 2008. We hope it proves that there's more profit in the seven virtues than in the seven deadly sins.

We ask: What was your best money move?

Prudence

John Paulson, the president of Paulson & Co., a hedge fund with more than $35 billion under management

While much of Wall Street was bingeing on the subprime-mortgage Kool-Aid -- and betting home prices would continue to climb -- Paulson was preparing for a housing market collapse. He sold short subprime-mortgage loans and bet against overextended banks.

Paulson is now profiting from his prudence. During what will likely prove to be the hedge fund industry's worst year on record, Paulson's $10 billion Advantage Plus Fund is up 33.52%, according to Reuters. His company's $5 billion Advantage Fund is up 21% for the year.

Those gains come during a year when the industry overall has lost more than 16% of its invested capital, according to Hedge Fund Research, a firm that tracks fund performance.

Fortitude

Alistair Darling, the United Kingdom's chancellor of the Exchequer

We have to hand it to Darling for courage under pressure. After U.S. Treasury Secretary Hank Paulson announced his plan to shore up the financial sector by buying toxic securities, Darling came up with a better idea: to buy stock in troubled banks instead. He had realized that buying securities at panic-driven lows wasn't going to be helpful. When Darling and U.K. Prime Minister Gordon Brown announced their program, financial markets began to stabilize.

Paulson soon opted to follow Darling's lead, injecting funds directly into banks, in return for equity or senior debt. This was not the first instance of waffling on Paulson's part. He saved Bear Stearns from bankruptcy, then let Lehman Bros. (LEHMQ, news, msgs) go under, then rescued American International Group (AIG, news, msgs). Some in Washington believe his inconsistency has been damaging.

Darling, however, is not immune to criticism. Recently he told Parliament that the U.K. recession would end in the second half of 2009, only to be blasted as naive. We won't quibble with Darling's optimism. After all, hope is also a virtue.

1 | 2 | 3 | next >