Hedge fund director John Paulson bet against the health of the U.S. housing sector by funneling cash into credit default swaps in opposition to subprime mortgages, which effectively ensured that as homeowners defaulted he would receive a massive cash advance on his investment in failure. Thanks to the bursting of the United States real estate bubble and some shrewd choices with United States financial records, Paulson is a billionaire. He will not be obtaining a payday cash advance to pay for his mortgage anytime soon. Resource for this article – Hedge fund manager John Paulson – Crook or guru? by MoneyBlogNewz.
John Paulson and the Citigroup venture
Paulson is every little thing that is wrong with Wall Street, according to many. After earning approximately $15 billion betting in opposition to the United States real estate industry in 2007 – and being labeled a "guru" for doing so – Paulson moved to the other side of the investment speculation fence. His bet now is that the U.S. economy will get better. This involved a series of investments in various indexes, also as an "after the fall" outlay in favor of rebounding house prices and a bet on high gold prices. About $1 billion was earned this year by Paulson's stake in Citigroup using Paulson & Co. Over the past year, Citigroup’s share price shot up 50 percent.
Currently, Paulson & Co. owns a ton of money in investments. About $35 billion is what the business is responsible for. Where most hedge funds eschewed the more volatile elements of the sector past year, Reuters reports that Paulson and business took small financial lumps early this year, yet managed to swing things around into double-digit gains. There was a 35 percent jump in 2010 in Paulson's gold investments while the Paulson Advantage Plus fund went up 17 percent.
Why does 17 percent matter?
When it comes to Paulson being successful, the Globe and Mail points out that the 15 percent gain that the S&P 500 had is not much farther down than the 17 percent the Paulson Advantage Plus Fund gained. But the Canadian newspaper’s viewpoint could just as easily be considered sour grapes. Even though Paulson did invest "against-the-bubble" hurting the economy in order to make himself millions, the federal regulators did not do anything about it. The majority are upset about this though. They say it is not an excuse to do what he did.
Information from
The Guardian
guardian.co.uk/books/2010/mar/07/the-greatest-trade-ever-by-gregory-zuckerman-review-heather-stewart
The Globe and Mail
theglobeandmail.com/globe-investor/markets/markets-blog/paulsons-5-billion-haul-big-deal/article1886319/
Reuters
reuters.com/article/2011/01/25/us-hedgefunds-paulson-idUSTRE70O4G820110125
Wikipedia
en.wikipedia.org/wiki/Credit_default_swap
John Paulson and Joe Stiglitz on the mispricing of risk
youtube.com/watch?v=l8G-b315B6E
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