Major Trades:

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Major Trades. Throughout his career, Professor Hanke has executed several landmark trades in commodity and currency markets. His approach combines rigorous macro and microeconomic analysis with deep knowledge of institutional structures, allowing him to identify mispricings that others miss.

For a summary of Hanke’s big trades:

Trading Notes .pdf606.9 KiB

Trades at a Glance

Year
Trade
Analysis
Outcome
1985–86
Short crude oil and gas oil via Friedberg Mercantile Group; short positions in Middle Eastern oil-linked currencies
Analyzed OPEC internal dynamics; predicted OPEC could not maintain production discipline; forecast oil below $10/barrel
Vindicated — oil crashed below $10/barrel in 1986; one of the most spectacular commodity calls of the decade
1993
Short French franc during ERM crisis
Assessed franc-Deutsche Mark peg unsustainable given diverging economic fundamentals between France and Germany
ERM crisis materialized; franc peg collapsed; trade successful
1994–95
Long Argentine peso-denominated bonds via Toronto Trust Argentina
Post-Mexican peso crisis contagion created panic selling; Hanke concluded Argentina’s convertibility system was structurally sound and would survive
World’s best-performing emerging market mutual fund in 1995; fund returned 79.25%
1997–98
Predicted Russian ruble collapse
His analysis of the Central Bank of Russia’s balance sheet threw up a red flag; predicted devaluation after mid-1998
Ruble collapsed August 17, 1998; prediction fully vindicated
Various (ongoing)
Commodity supercycle analysis
High inflation + low inventories + backwardation + energy transition + geopolitical shocks = “perfect cocktail” for commodity bull market
Ongoing analysis; structural bullish case for commodities

1985–86: The Oil Trade

In 1985, while serving as Chief Economist at the Friedberg Mercantile Group, Hanke analyzed OPEC's internal dynamics and predicted that crude oil would drop below $10 per barrel. Friedberg built large short positions in crude and gas oil, along with short positions in Middle Eastern currencies linked to oil revenues.

The analysis was grounded in a careful study of OPEC's internal mechanics and the structure of the international oil market — particularly the growing inability of Saudi Arabia to maintain production discipline among member states. As cheating on quotas became endemic, the cartel's pricing power eroded. The oil market collapsed as expected, making this one of Hanke's best-known commodity trades and one of the most spectacular trades of the decade.

1993: The French Franc Short

This trade landed Hanke and Mrs. Hanke in the well known Parisian weekly
This trade landed Hanke and Mrs. Hanke in the well known Parisian weekly Paris Match.

In 1993, Hanke led a successful short position against the French franc during the European Exchange Rate Mechanism (ERM) crisis. The trade was based on his assessment that the franc's shadowing to the Deutsche mark was unsustainable given diverging economic fundamentals between France and Germany.

This was part of a broader period of ERM instability, during which the British pound and Italian lira also exited the mechanism — demonstrating that pegged exchange rate regimes are always vulnerable to speculative attacks and often blow up.

1994–95: The Tequila Crisis and Argentine Bonds

In 1994, in the aftermath of Mexico's Tequila Crisis, Argentina's convertibility system came under speculative attacks. At the time Hanke was President of Toronto Trust Argentina in Buenos Aires. Argentine bonds and equities were radically mispriced. Hanke positioned the fund for a recovery of peso denominated assets. As a result, in 1995, Toronto Trust Argentina delivered a return that made it the world's best-performing emerging market mutual fund.

While markets feared a collapse of Argentina's convertibility regime in the aftermath of the 1994 Mexican peso crisis (the "Tequila Crisis"), Hanke concluded that the Argentine Convertibility System would survive the contagion. He aggressively purchased Argentine peso-denominated bonds at distressed prices. When the feared devaluation never materialized, the fund returned 79.25% in 1995.

1997–98: Russian Ruble Collapse

In 1997–98, drawing on his monetarist framework, deep expertise in post-Soviet monetary systems, and skill in dissecting central bank balance sheets, Hanke predicted the collapse of the Russian ruble.

He anticipated that a collapse of the ruble would occur after mid-1998. On August 17, 1998, Russia defaulted on its domestic debt and devalued the ruble in one of the largest emerging market financial crises of the decade. Hanke’s prediction was fully vindicated.

This was consistent with Hanke’s earlier published work: Russian Currency and Finance: A Currency Board Approach to Reform (1993, with Jonung and Schuler), which had warned that Russia's monetary arrangements were unstable.

Common Themes Across Major Trades

Principle
Description
Institutional analysis
Understanding the rules and constraints governing monetary and fiscal policy — not just market prices
Monetarist framework
Using money supply data and the Quantity Theory to forecast price movements before they appear in official statistics
Contrarian positioning
Taking positions against market consensus when fundamentals support it — e.g., buying Argentine bonds when everyone was selling
Patience with conviction
Holding positions through short-term volatility when the macro thesis is sound and institutional analysis supports it
Exchange rate regime expertise
Deep knowledge of the three basic exchange rate regimes, fixed, pegged, and floating allows Hanke to anticipate movements in foreign exchange markets
Supply and demand
At the end of the day, nothing beats understanding supply and demand fundamentals

Recent Publications (2025–2026)

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