The other funds are smaller. One can be right twice, but there's a reason his big fund isn't succeeding now and his peers at that size are. What is it then? He was consistently successful before he got big. He was successful for a short while after he got big but is doing terribly now in the big fund. The small funds are doing okay. So why is his big fund faltering so terribly compared to peers with similar size funds and why is his big fund faltering compared to the smaller funds?
Paulson actually said in an interview a large fund is optimal for his company. The reason he is losing is because he made huge bets on the recovery that he felt forced to exit by clients at the bottom in the fall of 2011. If he would have kept those bets on financials etc he would be no where near as down as he is. He is restructuring his strategies to please clients even though he knows his original hypotheses will be proven correct he just timed it wrong
Unfortunately I guess that's the reality of running a fund. He wasn't the only one to guess the housing crash, but he was the one who got the timing right. Most funds that large run pod structures so that they have many uncorrelated bets. I feel like he is trying to get one trade right each year. When you get that big most of your investors want bond like income profiles to offset their bond like liabilities (10% annual returns but no downside). Then again, I'm sure he understands the large fund business better than I as I don't have a 20 billion dollar fund.
Who are these clients and if they know so much about the markets why don't they manage their own money
Its not them telling him to change their strategy. Its them viewing the losses, and telling him he needs to cut back on the risk taking. He is basically changing strategies to reassure current clients that there will not be any more huge drawdowns
They have the money so he works for them. That's who they are. If they don't like what he's doing there are two options: they leave and he loses assets or he changes to appease them. Option one is happening. It's like the mafia. When you make money for the bosses you are untouchable. When you stop making money for them, you not worth the dirt they put your body in.
I am not sure who is more stupid: the Atlanta guy or Paulson. If the Atlanta fund manager invested 10 million in Paulson, and it went down, say, by 20%, did it send a signal that something was wrong? If the Atlanta fund manager didn't see anything wrong at 20% down, he may be a little stupid. When the 10 million went down to 6 million, the Atlanda fund manager saw nothing wrong, he is very stupid. When the 10 million went down to 4 million, the Atlanta fund guy is extremely stupid. When it went to 3 million, the guy is probably blind. But if those high-networth investors invested in a blind guy, those investors are stupid. Then it dawns on me that most people are stupid, including ET posters. good day...my private account..not a sim combine..lol +$5,828
Damn dude! He goes from a huge payday as a result of shorting the 2008 real estate crisis to taking huge hits afterwards. That's crazy. www.youngandopulent.com