One doesn't exclude the other. Analyzing differences between Paulson's style and a mechanical trader leads nowhere IMO.
Thanks for the post. Also interesting, I read about a year ago I think in Forbes, that some one originally approached him to "sell" protection intruments somewhat in a "retail" secondary type manner but he declined and figured out how to do it directly.
And yet even an elementary understanding of statistics would allow you to acknowledge that there is absolutely nothing statistically significant about this performance. Did he absolutely nail it? Sure. But point 8 is the most important point of all. There were hundreds of managers who saw this coming, but only a few were lucky enough to get their timing right. Are you going to bet that he will get lucky two or three more times in a row? I'm not. An absolutely amazing return ... but not something you realistically want to learn from. The lessons here are all about luck. But, as always, opportunity is the intersection of preparedness and luck.
Fund manager Paulson to start new gold fund Billionaire hedge fund manager John Paulson is launching a new gold fund, which will include $250 million of his own personal investment, the Wall Street Journal reported on Wednesday. Paulson is among a number of hedge funds managers stocking up on the precious metal, for centuries considered a hedge against inflation, as governments around the world ramp up spending to combat recession. Citing three investors, the Journal said the fund will focus on gold mining stocks and gold-related investments. Paulson spoke about the new fund, which will begin on January 1, at a meeting with his investors in New York on Tuesday. Paulson's combined gold and gold-related investments make up about half of his firm Paulson & Co's holdings. Paulson already owns big stakes in gold miners AngloGold Ashanti Ltd (ANGJ.J), Kinross Gold Corp (K.TO) and Gold Fields Ltd (GFIJ.J). He is also by far the biggest shareholder of SPDR Gold Trust, the world's largest gold-back exchange-traded fund (ETF). His investment in the ETF is valued at about $3.53 billion on Wednesday. A spokesman for Paulson & Co declined to comment. http://news.yahoo.com/s/nm/20091118/bs_nm/us_paulson_gold
I wish him well. I would note though, that from Livermore to Schwartz, the biggest loses some traders have had, have been right after their biggest home-runs. Paulson is sure setting himself up for that possibility.
Few investors ,as stated in this book,were able to put these trades on. He bought insurance at the rate of $1m for $1b of CDO's. His purchases were for 100's of million and he and a few others had huge drawdowns. This was a game that plays well in hindsight. A GOOD READ. cheers john