Zuckerman on Paulson: The All-Time Greatest Trade?

There is a lot of chatter out there about Greg Zuckerman’s new book about John Paulson’s subprime trade. Titled The Greatest Trade Ever (Broadway Business 2009) the book chronicles how Paulson’s risky trade came together and how it paid out, controversies, warts, timing and all. I have a copy on the way and am looking forward to reading it, but here is an opening excerpt:

The tip was intriguing. It was the fall of 2007, financial markets were collapsing, and Wall Street firms were losing massive amounts of money, as if they trying to give back a decade’s worth of profits in a few brutal months. But as I aid at my desk at The Wall Street Journal, tallying the pain, a top hedge-fund manager called to rave about an investor named John Paulson who somehow was scoring huge profits. My contact, speaking with equal parts envy and respect, grabbed me with this: “Paulson’s not even a housing or mortgage guy … And until this trade, he was run-of-the-mill, nothing special.”

… Paulson’s winning were so enormous they seemed unreal, even cartoonish. His firm, Paulson & Co., made $1 billion in 2007, a figure that topped the gross domestic products of Bolivia, Honduras, and Paraguay, South American nations nations with more than twelve million residents. Paulson’s personal cut was nearly $4 billion, or more than than $10 million a day. That was more than the earnings of J.K. Rowling, Oprah Winfrey and Tiger Woods put together. At one point in late 2007, a broker called to remind Paulson of an account worth $5 million, an account now so insignificant that it had slipped his mind. Just as impressive, Paulson managed to transform his trade in 2008 and early 2009 in dramatic form, scoring $5 billion more for his firm and clients, as well as $2 billion for himself. the moves put Paulson and his remarkable trade alongside Warren Buffet, George Soros, Bernard Baruch, and Jesse Livermore in Wall Street’s pantheon of traders. They also made him one of the richest people in world, wealthier than Steven Spielberg, March Zuckerberg, and David Rockefeller Sr.

Comments

[woollyB:]

Hope the book has fewer typos than your excerpt.

Nov 10 04:28 PM

[Roger Knights:]

"His firm, Paulson & Co., made $1 billion in 2007, .... Paulson’s personal cut was nearly $4 billion, or more than than $10 million a day."

Does not compute.

Nov 12 12:15 AM

[sidney:]

it would be interesting to compare to the 4200% return in 10 years that Soros/Rogers made in the quantum fund. I wonder if its more or less in those terms or should we wait another 7 years to find out what his 10 year return is?

Nov 14 12:52 AM

[lynnybee:]

I also noticed the typos immediately. Hope the author will go through his article and update it. I was distracted from the article's content. Sincerely ............


On Nov 10 04:28 PM woollyB wrote:

> Hope the book has fewer typos than your excerpt.

Nov 14 05:54 AM

[anarchist:]

OMG, three infomercials in a row. This is becoming a real problem on SA, is there any way to stop these guys?

Nov 14 10:15 AM

[bobbybutte:]

Paulson is a guy I follow alot

Nov 14 10:41 AM

[D. McHattie:]

I couldn't help but think of the moral implications of this.

Did Paulson really produce more value to our global economy than the 12 million people residing in Bolivia, Honduras and Paraguay?

Or do we have a system that allows certain people, albeit very bright and courageous, to skim off massive amounts of monetary units without actually creating anything of value?

Is this really something to celebrate?

Nov 15 12:18 PM

[davidbdc:]

Agree in theory with D McHattie. What would be interesting is to know how much of his own money was on the line from the get-go.....versus just how much of other people's money was bet with him getting a cut.

Nothing at all against Paulson nor him earning big bucks as his trades obviously turned out to be correct, but I think we all know that those on the other side of his bets also managed to walk away with money.....albeit millions instead of billions......and all of it a percentage of other people's money.

Nov 15 01:57 PM

[Plan B Econ...:]

Net profit for companies is reported after salaries.

I don't have the details of this example, but I imagine this is the case.

On Nov 12 12:15 AM Roger Knights wrote:

> "His firm, Paulson & Co., made $1 billion in 2007, .... Paulson’s
> personal cut was nearly $4 billion, or more than than $10 million
> a day."
>
> Does not compute.

Nov 15 06:52 PM