Posted on 11/11/2009 8:20:20 AM PST by SeekAndFind
In a span of just three years, hedge-fund manager John Paulson went from practically unknown to practically unparalleled. After a series of smart bets against the housing market made Paulson's hedge fund billions of dollars—including days where it made more than $1 billion—he earned a place alongside George Soros and Warren Buffett as an oracle of investing. In his new book, The Greatest Trade Ever, Gregory Zuckerman, a reporter at The Wall Street Journal, examines how the unlikely team of Paulson and assistant Paolo Pellegrini—as well as a few other investors—bucked conventional wisdom and saw through the housing hype.
Who is John Paulson, and why is he worthy of an entire book?
John Paulson spent a career on Wall Street underappreciated as an investor, in relative obscurity. Only on Wall Street can you be worth about $100 million and still be in relative obscurity. He had slowly built up his hedge fund, and by 2005 or so he started getting nervous about this whole housing market and tried to think, maybe I should bet against it. And he wound up making the greatest trade in financial history. In 2007 alone he made $15 billion for his firm—by way of comparison, George Soros made a billion dollars betting against the British pound [in 1992]—and in the next, in 2008, he transformed the trade into more of a bet against financial firms and made another $5 billion. And yet he wasn't a mortgage expert, or a real estate expert, and didn't have much background in the derivatives he used to make the bets, like credit-default swaps (CDS).
The employee who helps execute the idea is an even more unlikely player in this drama.
(Excerpt) Read more at newsweek.com ...
http://seekingalpha.com/article/138557-what-s-john-paulson-buying-now-hint-think-gold
Guess what he is buying now? GOLD!!!!!
I watched a show on MSNBC (I think) where they went into some detail on the housing collapse. They talked to one guy similar to Paulson who said he was interviewing RE people and came away with the feeling that they all seemed to be in another world. He too bet against them and made out like a bandit.
If I'd had his seed money I'd have done the exact same thing.
As it was I bet against the housing bubble by selling my house in early 2006, the easiest $300K I ever made in my life.
The number of brain cells it took to see that housing was stunningly overvalued could be counted on the fingers of one hand.
I am not the person to whom the question was posed but I will answer.
The stock market. It’s largely based on imaginary value and earnings for the future. I am not optimistic about our economic future and I believe the stock market is incredibly overvalued based on our long term prognosis. How many of these companies will even survive?
#2 is that stuff you see G.Gordon Liddy shilling for all the time in commercials on FNC.
It’s still the Housing market. FHA is doing sub prime loans. Freddie and Fannie needs more tax money and the refinance past sub prime home owners ain’t going too well. Those with good credit and still working are paying down debt and stashing cash.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.