
Here’s How John Paulson Made $5 Billion Last Year - raphar
http://blogs.forbes.com/robertlenzner/2011/01/29/heres-how-john-paulson-made-5-billion-last-year/
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jakarta
John Paulson is really interesting in that he really played the entire credit
cycle. He shorted it and then turned long at the right time and has been
profiting from the recovery.

Most of the other guys who shorted the bubble got the part after wrong. They
expected these doomsday/cataclysmic scenarios which never arrived.

I think the underlying lesson is that as an investor, when you are thinking of
big picture themes, you really have to keep an open mind and have a
willingness to change positions. Soros demonstrated that with his career.

There are tons of one hit wonders in the investment world because they let
their egos get the better of them.

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jsm386
There was an interesting article in the Boston Globe the other day about this:

 _There’s no great, complex explanation for why people who get one big thing
right get most everything else wrong, argues Denrell. It’s simple: Those who
correctly predict extreme events tend to have a greater tendency to make
extreme predictions; and those who make extreme predictions tend to spend most
of the time being wrong — on account of most of their predictions being, well,
pretty extreme. There are few occurrences so out of the ordinary that someone,
somewhere won’t have seen them coming, even if that person has seldom been
right about anything else._

[http://www.boston.com/bostonglobe/ideas/articles/2011/01/09/...](http://www.boston.com/bostonglobe/ideas/articles/2011/01/09/that_guy_who_called_the_big_one_dont_listen_to_him/?page=full)

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T_S_
The article is a waste of time. Just explains that he charges high fees and
makes more when his clients do.

Perhaps someone can comment on the positions that paid off.

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damoncali
The position is not that interesting (as I understand it): He bet that the
world was over-levered beyond reason. That was not a terribly uncommon thought
in '05-'08 (anyone paying attention knew the math didn't add up). The
interesting part is the enormous size of the bets he made, that he was able to
make them, and that he got the timing right. Don't know that anyone will write
that article, though...

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jakarta
Nobody needs to write another article about it. It has been profiled to death.

He used CDS to bet on the bubble collapsing and then bought gold, bank stocks,
distressed debt, and bet on mergers to play the recovery.

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trotsky
I'm really surprised to hear that he sees gold outperforming for the next five
years. With so much appreciation in the last two-three years I wouldn't have
thought it was a hedge against anything.

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ct
If one thinks the market is going to go down and wants to hedge seems another
alternative is to go long the dollar like UUP instead of GLD, since the dollar
is inversely correlated with the market. A higher dollar makes investing in US
companies more expensive for foreign investors.

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some1else
And he'd have made a lot more if he just let YC handle those 15 billion
dollars :-P

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SpikeGronim
I doubt that YC has $15 billion in opportunities every year. They also focus
on using their expertise and networks to help their startups, so having 1,000
YC startups wouldn't work.

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some1else
Okay. Maybe if there were 15 YCombinators spread around the world then?

Either way, startups vs. subprime mortgages.. Think about it.

