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Incidentally, Mikkel, you're right about the puts — that's the way to do very well in a bear market (I bought puts in 1998 and sadly didn't have them against NASDAQ in 2000 — my brother called to ask me if I had). Long-term zero-coupon bonds can be okay, too, but the big money can be done with puts (just with calls if the market for something and its stock price zooms up). Yes, I believe there may be insider trading with those who know some company is about to announce serious trouble.

And make sure you have no money in any account that isn't FDIC. There are a ton of people that have money market accounts that aren't covered by insurance, make sure you aren't one of them.

But the puts were selling for $0.15 and are now worth $5…that's 33x gain. The article acted like the puts were bought as insurance which is ridiculous. Why would any one pay money for puts that would only help if you lose 50% of your investment. Likewise, I doubt it was a short selling strategy, because they were only selling for 15 cents, so having a covered put doesn't make sense either. It has to be someone that knew what was going to happen, just like there were 50,000 mysterious calls in Countrywide right before the Bank of America deal. This stuff goes on all the time even blatantly. (It's possible that Bear Stearns or members even bought the puts on themselves).