How did people profit from the 2008 crisis?

Question

Like how did they make money by predicting it ? what was the strategy?

In: Economics

Answer 1

It’s called “shorting”. The basic idea is to borrow something you believe will go down in value and then sell it to someone else immediately . When the time comes that you have to return it to the person you borrowed it from, you buy it (hopefully at a now lower price) and give it to them. In the case of 2008, that thing would have been an investment based on residential real estate.