Here's how Wall Street's biggest investors performed during the third quarter's extreme volatility

Published Sun, Oct 2 20228:00 AM EDT

The historic turbulence in the markets during the third quarter tested investors' nerves, but some of Wall Street's biggest names are reaping their best returns in years by benefiting from the wild swings in different asset classes. It was the first time in about 80 years where the S & P 500 suffered a quarterly loss after being up more than 10% at one point, according to Bespoke Investment Group. Meanwhile, crazy moves are also being seen in bond yields, currencies and commodities as the Federal Reserve reiterated its commitment to rate hikes in its inflation battle. The extreme volatility bodes particularly well for macro players, who make bets around political and economic events. Ray Dalio's hedge fund firm Bridgewater is on pace to post its best year since 2010 with its Pure Alpha II fund rising 32.7% through Sept. 23, according to a person familiar with the firm's returns. Citadel is also having a stellar year, with its multi-strategy flagship fund Wellington rallying more than 25% through the end of August, according to a person familiar with the returns. Bridgewater and Citadel executives have described their views on the central bank's tightening path and their economic outlook in recent public appearances. At CNBC's Delivering Alpha conference in New York City on Wednesday, Ken Griffin , Citadel's founder and CEO, said he believes the Fed has more work to do to bring down inflation even after a series of big rate hikes. He added there could be a chance for a recession next year. In mid-September, at the SALT conference, Bridgewater co-CIO Greg Jensen said the belief that inflation is going to normalize to around 3% over time is too optimistic. The widely followed strategist said he expects price pressures are going to stay "stubbornly higher than the market expects." Persistent inflation, combined with slowing growth in the U.S., will continue to weigh on asset prices, Jensen said. Asked about where to put money to work right now, Jensen said Latin America and commodity assets look relatively attractive. Dalio recently issued a pessimistic warning for the markets, predicting the policy of keeping interest rates elevated to squash inflation could tank stock prices by 20%. Tech investors buying the dip While macro players took advantage of the market mayhem, tech-focused investors suffered more losses this quarter on the back of rising rates. Cathie Wood's flagship ARK Innovation ETF lost about 4% in the third quarter, suffering its fifth negative quarter in a row. The innovation investor has been busy buying the dip in the market, snapping up shares of her tech darlings during the sell-off including two of her largest holdings, Roku and Zoom Video. Bracing for the fourth quarter Markets plagued by increasing economic uncertainty and geopolitical risk in fourth quarter Wall Street analysts' favorite stocks for the fourth quarter include a casino name that could double No more 'TINA:' The case for putting money into cash, short-term bonds in this volatile market The fourth quarter starts now, and it's not looking good for the economy Altimeter Capital CEO Brad Gerstner is in a middle of a tough year as well. Some of his top holdings have racked up steep losses. Microsoft dropped more than 8% in the third quarter, while Meta Platforms lost 15%. Snowflake and Uber , however, rebounded during the period. In mid-September, Gerstner revealed a new position in Tesla , betting on the industry leader amid the global trend toward vehicle electrification. Value investors didn't buckle Some of the biggest value investors also kept themselves busy during the Fed-triggered stock rout. Leon Cooperman said he's having a "decent" year relative to the major stock indexes, and he's finding a lot of individual stocks that are attractively priced. The CEO of the Omega Family Office said he's keeping his expectations low as investors are still stuck in a bad environment. Warren Buffett 's Berkshire Hathaway bought more shares of Occidental Petroleum this week, continuing to add to its massive stake as the legendary investor remains unfazed by the pullback in oil prices. Berkshire's stake in Occidental has now reached 20.8%. The bet has steadily increased over the past few months. In August, Buffett's firm received regulatory approval to purchase up to 50%, spurring speculation that it may eventually buy all of Houston-based energy company.