The speculative frenzy of retail investors, ruthless AI disruption, extraordinary rises in Cryptos, massive liquidations from leveraged trading, and high-stakes bets on Trump's victory... In the tumultuous and surprising year of 2024, the global market offers investors opportunities for wealth or bankruptcy.

The results show that investors who maintained simple investments (Cash / Money Market or Technology Stocks) were wise.

As this trading year comes to an end, this article focuses on notable trades.

Cryptos: It feels like hopping on a rocket and soaring high.

This year, Wall Street and the incoming Trump administration helped create a thriving Cryptos investment ecosystem, leaving the traditional financial world in shock.

Although$Bitcoin (BTC.CC)$A remarkable rebound has already been achieved in 2023, but the approval of the spot Bitcoin ETF by the USA in January further fueled the rise of this largest digital asset in the world. However, it was Trump's victory in November that truly propelled the market, triggering a record-breaking rebound with Bitcoin surpassing the $0.1 million mark. Along the way, traders poured over $100 billion into the ETF, paving the way for similar cryptocurrency-related investment tools.

Trump was once a skeptic of Bitcoin and later became a supporter, promising to reverse the Biden administration's crackdowns on Cryptos and make the USA the center of the industry, thereby igniting enthusiasm in the digital asset community.

In the weeks following the election, he announced the newly created positions of AI and Crypto "Tsar," appointing industry supporter Paul Atkins to succeed Gary Gensler as the commissioner of the Securities and Exchange Commission.

ETF: Speculation Boom

In a year marked by a surge in US Stocks and Cryptos, ETFs have been the preferred investment product for day traders.

Wall Street capitalized on the public's craving for speculative bets, launching a variety of derivative-powered wagers, from bull market ETFs aimed at delivering double the returns of Bitcoin to revenue products that short the largest companies in the USA. For investors on the opposite end of the risk spectrum, there are now Money Market ETFs.

Allowing investors to increase their bets on the world's mostPopular stocksbet products have flourished, with investors pouring a record over $6.5 billion into such "single stock ETFs"—these tools track only one company but leverage derivatives to amplify bullish or bearish bets.

The asset management company GraniteShares is a big winner among these Funds, with a daily return rate that is double that of market giants.$NVIDIA (NVDA.US)$Its Assets surged to a peak of $6.7 billion at the end of November, with a return rate exceeding 350% this year.$MicroStrategy (MSTR.US)$、$Tesla (TSLA.US)$and$Coinbase (COIN.US)$The fund has also followed a similar path.

This year's ETF flows in the USA have also set records, and Trump's victory in the presidential election has given the already bold investors even more motivation to invest heavily.$S&P 500 Index (.SPX.US)$While the fund tracking has received the most inflows, one of the most notable new funds this year – Blackrock's Bitcoin ETF – has also been one of the biggest success stories, attracting the third most inflow of funds this year.

US Stocks: Investors narrowly missed out on the big surge.

Day traders may have made a fortune on the speculative edge of the investment industry, but in the more mainstream Large Cap world, they have been struggling. It has all been a matter of misfortune.

In the first half of this year, retail investors aggressively chased after so-called "meme stocks," only to see these hype-driven companies lag behind the market after inexplicably surging.

By the second half of the year, retail investors collectively abandoned financial companies, resulting in these firms capitalizing on the "Trump trade" wave, becoming the best performers in the S&P 500 Index between July and November.

Like many investors during the brief market crash in August, retail investors panicked and sold some of the hottest assets, including NVIDIA and Tesla, all at the lows. As it turns out, this proved to be painful. For example, Tesla, Musk's electric vehicle manufacturer, has nearly doubled in stock price since then.

Emma Wu, a quant and derivatives strategist at JPMorgan and her colleagues noted that this mispositioning has resulted in a mere 9.8% ROI for retail investors this year. This is the second weakest performance among years with positive returns for the Index since 2015.

However, this is not just a matter of so-called "dumb money." Even in an environment filled with stock-picking experts, living by selecting securities is challenging.Mutual fundsProfessionals were also caught red-handed.

Data from Bank of America shows that the S&P 500 Index surged 5.7% in November, achieving its best performance in a year, yet only 23% of large-cap mutual funds outperformed the benchmark, marking the worst performance for such funds since the Fed began raising interest rates in March 2022. Given that more than half of the S&P 500 Index members outperformed the index, the market rise expanded, theoretically a Bullish sign for active fund managers, making the poor performance particularly notable.

Argentina: A shocking surge.

Ahead of a crucial presidential vote last year, long-suffering investors in Argentina fled. With the Argentine economy struggling under triple-digit inflation and a maze of currency controls, sovereign dollar bonds were trading below 30 cents. Javier Milei's unexpected victory in the primary vote heightened concerns.

This radical liberal, characterized by a wild hairstyle, sideburns reminiscent of Elvis, and four cloned mastiffs, had promised to dollarize the economy and completely shut down the central bank. However, when he won the election, investors had already bought stocks. Now, Milei's 'shock therapy'—that includes strict fiscal austerity measures to balance the budget and reduce inflation—has been implemented for about a year during his tenure and seems to be working, boosting voter and investor confidence in the economic development trajectory.

According to data compiled by Bloomberg, the country's bonds have delivered the best returns in Emerging Markets this year, surging 104%. Some companies, such as Neuberger Berman and Grantham Mayo Van Otterloo & Co., have seen huge profits. Neuberger's Emerging Markets debt portfolio manager Gorky Urquieta said, 'We believe Milei might bring about change.'

But the rebound in 2024 is unlikely to replicate in the short term, as many issues remain. Milei has yet to lift currency controls, foreign investment is down, and the country is negotiating with the International Monetary Fund before a significant debt increase in 2025 and 2026. However, in the first year, the so-called 'madman' Milei has brought good news for investors.

U.S. Treasury Bonds: Cash is the king of Bonds.

Fixed income investors easily earned substantial returns by adopting a completely non-trading strategy: they deposited funds into risk-free Treasury bills (T-bills, or short-term U.S. Treasury bonds, equivalent to cash), thus easily outperforming U.S. government bonds.

As of December 18 of this year, the average yield on U.S. Treasury Bonds was 0.7%, while the yield on Treasury bills was 5.1%. This marks the fourth consecutive year that bonds have underperformed cash, setting a new record since Bloomberg began compiling Treasury yield data in 1991. Over the past four years, Treasury bill's total ROI was 12%, while government bonds' ROI was 10%.

U.S. Money Market Funds (holding cash-like securities such as Treasury bills and commercial papers) have grown by more than $800 billion this year, with a significant influx of investors, bringing their assets to $7 trillion for the first time. Who else are the hoarders? Berkshire Hathaway, led by Buffett, has more than doubled its holdings of Treasury bills this year, nearing $300 billion by the third quarter.

Things shouldn't have turned out this way. As 2024 begins, there is consensus that U.S. economic growth will slow down, and there may even be a recession, with the Federal Reserve expected to implement as many as seven interest rate cuts. This was believed to pave the way for a stellar year for bonds.

But the reality is quite the opposite; strong economic performance has led the Fed to introduce fewer easing policies than expected and prompted decision-makers during the recent meeting to adjust downward their rate cut projections for 2025. This has kept the yield on risk-free cash equivalents at a high level, even as longer-term U.S. bonds experienced volatility.

However, the situation has started to change, and next year may prove more challenging for Treasury Bill holders.

For more than two years, the yield on Treasury bills (U.S. short-term government bonds) has been higher than that on U.S. long-term bonds, but this yield advantage has now disappeared, with the 1.5 percentage point gap that existed at the beginning of 2024 now closed. If the Fed continues to cut rates as expected, this trend may likely continue, though Trump's push for tariffs and tax cuts to spur economic growth may muddy the waters for decision-makers.

More importantly, Bonds have once again become a hedge for risk assets (such as Stocks with valuations at historical highs). Ford O'Neil, a bond manager at Fidelity Investments, said: "If Stocks fall, your Treasury portfolio will appreciate. But short-term Treasuries clearly will not do so."

"Doomsday Judgment": Hedge Fund Bets Collapse

Investors initially thoughtmergers and acquisitions.套利（一种投资策略，投资者利用公司mergers and acquisitions.活动中的股票价格差异来获取收益）会在今年卷土重来，但结果却并非如此。截至10月份，在彭博追踪的30多种对冲基金风格中，该交易策略是今年表现最差的。在此期间，其3%的回报率几乎没有为投资者带来风险回报。

Although the announced transaction volume in 2024 has increased globally, due to the regulatory environment under Biden and his tough Federal Trade Commission head Lina Khan, even agreed-upon deals are difficult to complete, thus placing pressure on Merger Arbitrage strategies.

One particularly painful event involved a proposed handbag collaboration aimed at uniting Tapestry Inc. and its Coach and Kate Spade brands with Capri Holdings Ltd.'s Michael Kors brand. Even after the Federal Trade Commission questioned the $8.5 billion deal on antitrust grounds, a number of investors, including Millennium Management, maintained their positions in Capri, betting that the legal appeals the two companies would subsequently file would favor them. However, in October, a federal judge sided with the Federal Trade Commission and blocked the deal, leading to a nearly 50% drop in Capri's stock price, significantly impacting the Arbitrage trading crowd.

Japan: Stay Calm, Arbitrage Trading Continues

On the first Monday of August, driven by a minor policy shift from the Bank of Japan, a reliable and highly popular trade of borrowing yen to purchase high-risk securities suddenly collapsed, triggering a crash in the Global markets.

Investors rushed to exit all positions from Australian Bonds, USA Large Cap stocks to Bitcoin, fearing the leverage cycle would collapse amid uncertain currency and economic outlook.

The biggest losers were the Emerging Markets arbitrage trades funded by yen, as investors closed out as much as 75% of their investments, causing most of the gains from this strategy this year to evaporate.

Then, like a folk tale now told on Wall Street, the catastrophic market collapse of 2024 ended almost as soon as it began, and the risk appetite for various Assets returned.

October once again boosted Cash / Money Market sentiment: on his first day in office, Japanese Prime Minister Kishida Fumio stated that Japan's economy was far from ready to adopt new monetary tightening policies.

Therefore, despite the fluctuations, as of last Thursday, a basket of Emerging Markets currencies funded by the Japanese yen has achieved an ROI of about 13% this year. The yen's movement has severely deviated from the predictions of Institutions like Bank of New York Mellon, which had forecasted that with more short positions being covered, the yen might strengthen against the US dollar to a high of 100. Forex brokers like AT Global Markets and Pepperstone Group quickly called for the notorious yen financing trades to be restarted.

Commercial Property: A rebirth.

For investors, this year's office real estate has experienced 2008-like losses and unexpected victories.

Many bondholders are burdened with old debt related to office buildings, and even the safest Bonds have been affected. In May of this year, buyers who purchased AAA-rated Bonds associated with the building at 1740 Broadway in Midtown Manhattan recovered less than three-quarters of their original investment.

This is the first such loss in the post-crisis era, and more pain may be on the way.

However, amid this predicament, a group of bargain hunters is likely to thrive. Ellington Management Group, Beach Point Capital Management, Balbec Capital, Mica Creek Capital Partners, and TPG Angelo Gordon are all active buyers of Commercial Mortgage-Backed Securities (CMBS) this year.

One potential source of returns is when people worry that major tenants will leave the building, only for those tenants to ultimately renew their leases.

For example, the riskiest portion of the $0.271 billion bond associated with the 11-story office and retail building at 85 Tenth Avenue near the Chelsea Market was trading for about 63 cents at the beginning of the year.

This building relies heavily on a single tenant—Google—whose lease is set to expire. When this tech giant announced that it would renew its lease in October, bond prices soared, with the current trading price nearly reaching 90 cents, providing substantial returns for those buying at Low Stock Price.

Bad Debt: AI to the Rescue

To understand how the surge of AI has suddenly changed the rules of the game for companies in the USA, one might take a look at the case of Talen Energy.$Talen Energy (TLN.US)$This nuclear energy company went bankrupt last year, but after reaching an agreement to...$Amazon (AMZN.US)$After the network service company (Amazon Web Services) sold its datacenter facilities and energy supply agreements, the company's fortunes noticeably improved.

After creditors became shareholders, their equity value skyrocketed, with the current annual increase exceeding 200%. Considering the booming development of AI requiring vast amounts of electrical utilities, companies like Talen Energy are thriving.

Another company that was once overlooked has also benefited from AI, which is Lumen. Last year, this telecom company underwent the largest and most controversial bad debt conversion in history. The company reached an agreement with a group of investors, including Ken Griffin's Citadel, to convert certain securities related to one of its departments into longer-term, higher interest rate securities while raising new funds. In return, these investors received preferential claim to the assets — stripping away the collateral from other creditors.

This year, even for creditors excluded from the deal, this transaction has turned into a significant victory, as the company has been able to capitalize on the increasing demand for its fiber optic network from AI-focused companies. As of August, the company has secured $5 billion in new business, including agreements to expand its network capacity with$Microsoft (MSFT.US)$the agreements reached.

Spain: Soared 2900% in seconds!

Perhaps the craziest and most unexpected rebound came from a niche market in Madrid, Spain. How crazy? It increased by 2900% in seconds! However, the entire process had actually been brewing for about 20 years.

In short: A bank issued a bond in the early 1980s, which was subsequently acquired by another bank, and that bank by yet another bank. At some point during these operations, investors abandoned the bond. Due to various ownership tricks, most people considered it to be nearly worthless.

Many years passed just like that, until one day in September, they received.$Banco Santander (SAN.US)$Notice from the last acquirer, stating that their Bonds would eventually be redeemed. The value of the Bonds skyrocketed instantaneously.

Banco Santander has never disclosed the reason for making this payment, but observers speculate it is related to balancing its balance sheet.

Editor/rice