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Trader Makes $3 to $4 BILLION Last Year

Posted by billspaced | 10:02 AM | , , , | 0 comments »

John Paulson is the luckiest man alive. He's undoubtedly very smart, too. He's a hedge fund manager and, by definition, an opportunist.

Here's a story that tells the tale of how he got in on the short side of the mortgage meltdown and won.

BIG. As in Billions BIG.

Hedge fund managers make their money off realized and unrealized capital gains. This means that if a $100 million fund increases in value to $110 million, he just made $2 to $2.5 million (they typically take 20-25 percent of the gain).

Hedge funds are not something ordinary folks like you and me want to get into. Nor can we. They're for very high net worth people who can afford to lose money.

Most often, however, these hedge funds earn outsized gains because they can operate unlike mutual funds. They can short a security, they can invest huge percentages of their funds in one stock, etc.

This WSJ article gives some insight into the mortgage meltdown and the credit crunch. Paulson guessed right at the right time. Good for him.

Too bad that in these markets, big winners are matched by big losers (anybody who owned a mortgage or a house).

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