Paulson's Biggest Fund Cut In Half

Tyler Durden's picture

A few days ago we suggested that based on ongoing losses in the portfolio of Paulson & Co, the biggest fund of the firm, Advantage Plus, is down a massive 50% YTD. A few hours ago, Absolute Return confirmed that the firm which has stepped on virtually every single possible landmine year to date, has had its AUM cut if not exactly in half, then surely close enough for Keynesian work, at -47%. And with that the speculations of an imminent terminal redemption event coupled with liquidations of the firm's gold share class (its GLD holdings) will resume, although the one thing unclear is whether Paulson has already sold off the bulk of his winners. We are confident we will learn the answer as soon as Monday.

And also:

  • Paulson Credit Opportunity:-11.86% (-18.13%)
  • Paulson [very appropriately named] Recovery Fund:-14.25% (-31.33%)
  • Paulson Gold: -16.35% (1.34%)

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X.inf.capt's picture

geez, wonder what his golden parachute would look like....

Long-John-Silver's picture

Before or after 5 rapid pace margin hikes?

Fukushima Sam's picture

Everything is fine, absolutely fine, over at Paulson & Co.

CrazyCooter's picture

Hey ZHers, I am working on beefing up my reading pile for the winter (days are getting short!) and I bumped across this book ...

A History of Interest Rates (Fourth Edition) by Sidney Homer/Richard Sylla

... and was curious if anyone could reccomend a better book (for non-finance folks such as my self) regarding said topic? Interest rates are historically low and I want to try to get some perspective on how this song/dance played out in the past. I specifically want a historical perspective of interest rates and prefer something narrative being as I am not a finance professional by trade.

This book seemed a good fit given these criteria, but I figured ZH would be a good place to ask for a second opinion!

Thanks in advance!

Cooter

CrazyCooter's picture

Care to expound on that recommendation? "Literal ivory towers" googles nothing but junk (and I am not a chick - no junk for me!)

Regards,

Cooter

GubbermintWorker's picture

Then why do you call yourself a crazy pussy?

CrazyCooter's picture

Cooter is a "new" euphemism that seems to be regional to the SE. Cooter is actually southern slang for a turtle, so its Crazy Turtle.

The moniker actually comes from The Dukes of Hazard. Given this was a family show at the time, I am pretty sure the producers did a bit of work to make sure the mechanic in the show was not "crazy pussy".

Regards,

Cooter

caerus's picture

hi cooter...not about interest rates really, but if you trade i would recommend "reminiscences of a stock operator" by livermore...he wrote another book called "how to trade in stocks" which is less biographical and more technical...there's also "extraordinary delusions and the madness of crowds" which is a great history of mass hysteria, markets and otherwise...just my opinion...good reading

CrazyCooter's picture

Yup, read that one. Excellent read. It makes it very clear how things have, and more importantly, have not changed. Based on my science/engineering know how, there are some equities I could get long, but otherwise I see the whole market as a casino and I am not the house.

Right now I am trying to wrestle the topic of interest rates and where they are going, not based on micro, but on macro/historical. We are basically at zero, so there isn't much move left to the downside (and bond prices are topped off), so, and I mean this with all humility, there is no where to go but up (and down for bond prices).

I don't think it is so simple, but that is what I am interested in learning about, at least from a historical perspective.

Thanks for your response. :-)

Regards,

Stuart

EDIT: I added "Extraordinary Popular Delusions & the Madness of Crowds" to my list, seems interesting!

caerus's picture

it's a great book...btw there's a book that was published fairly recently by niall ferguson called "the ascent of money" i think he has a pbs special too...anyway he does a pretty good job of tracing the origins of the bond market beginning w the medicis...he's a bit cheezy but his facts are if nothing else a nice starting point

CrazyCooter's picture

Yeah, I went through a bunch of Niall YouTubes. Good stuff over all. I really prefer Tainter on that particular subject, but it was good material none less. Also read Ralph Fosters "Fiat Paper Money" which was excellent.

Regards,

Cooter

jeff montanye's picture

as you have found out, there isn't as much effort put into explaining the history of interest rates to beginners as one might wish.  my reading of an earlier edition of homer's book gave me one sort of insight: there are four major types of markets related to interest rates/inflation and each has a different ordering of expected performance of asset classes.  an economy goes through cycles of rising rates and falling rates, inflation and deflation, each initiated by the excesses of the predecessor.  the first part of each cycle, the "good" part because the excesses are corrected, is followed by the "bad" part where excesses of the new cycle (either inflation or deflation) assert themselves.  

stocks perform well in the first part of either era, poorly in the second (usually 80% real losses). bonds perform well in both parts of a falling rates cycle, poorly in the rising one, spectacularly so in the second part.  cash and gold perform well in the second parts of both cycles.  miners also do well in the early years of the first part of a rising rates cycle.  real estate does better with rising rates but can progress in the first part of a falling rates cycle.  the second part is poison for it like the second part of the rising cycle is for bonds.

the current cycle begins about 1932 for stocks, later (maybe '42) for real estate.  interest rates rise slowly from 2% to 4% or so by the mid sixties when stocks top and begin to decline (especially inflation adjusted).  gold peaks in 1980, rates in '81 (bonds bottom) and the deflation cycle begins.  stocks top in 2000 and gold bottoms in 2002.  bonds put in a near term top in '08 (but it is not over yet, possibly).  a bit programmatic but it seems to help.

CrazyCooter's picture

Very interesting opinion. I will tuck this one away and chew on it.

Thanks for sharing!

Regards,

Cooter

spekulatn's picture

Victor Niederhoffer's site may be helpful. He is quite the character. Hope it helps.

http://www.dailyspeculations.com/wordpress/

 

Try the search function for past posts on the subject you are interested.

 

Here is a reading list:

http://www.dailyspeculations.com/list.htm

CrazyCooter's picture

Thank you. Going through it now. :-)

Regards,

Cooter

EDIT: Excellent stuff in that link! I think I found enough to keep me busy for a few months! ;-)

disabledvet's picture

Read all of Chernow's biographies (Morgan, Rockefeller, etc) and of course Buffet's "Snowball" is a must read. Finish it off with Treasury Secretary Hank Paulson's book about his time during the finanical crisis in 2008. Then ask yourself "who the phuck am I?"

Freddie's picture

It is a shame that no one rubs Buffett's nose in his dispers.  Evil old man like Soors.

j0nx's picture

What's a disper and who is Soors?

hondamikesd's picture

Just wanted to chime in and second that the "the ascent of money" was a pretty good read read, if, like Caerus said, a bit cheesy at times.

Dick Fitz's picture

CrazyCooter (love the name)

I know you want something "Modern" but understanding the fundamentals of interest rates and modern banking is more important, so go here-

http://goo.gl/Jv8fk

Man, Economy, and State with Power and Market - Scholars Edition by Murray N. Rothbard.

It's all you need to know to understand the future of the USDollar, and the world economy.

CrazyCooter's picture

Thanks, will look into it. I am really focused on interest rate moves and the circumstances/implcations surrounding them. I mean, our rates are historically low outliers, so it begs to be thought about. Kind of obvious where things are going from here!

I think I have my head generally screwed on straight in the macro sense of things and in terms of fundamentals, but I feel sort of ignorant ont he subject of interest rates and the policy implications surrounding them.

Thanks for the material!

Regards,

Cooter

EDIT: Holy shit, 1400+ pages!

CrazyCooter's picture

LOL! There is truth in that recommendation me thinks!

Regards,

Cooter

Mike in GA's picture

Money of the Mind by Jim Grant

You won't read a better book than this.  Jim covers the dry topic of archaic American financial history with such a rich wit it is like colorizing an old black & white movie.  Great wintertime reading. 

CrazyCooter's picture

Oh, didn't think to see if he had any books. Will do!

Regards,

Cooter

Freddie's picture

There is no comparable period in US history of this level of corruption with an usurper in the White hut looting the treasury and his zombies on the streets doing faux street theater.   The Wall Street Protests are ACORN 2 aka typical fake community agitator marxism.  A better book might be about the rise of Lenin.

Die Weiße Rose's picture

As long as corporate criminals like John Paulson and Lloyd Blankfein

are part of Wall Street, there will be No Reform or Change in financial markets or for the US economy.

There will be more un-employment and the US will face a severe Depression

due to a total lack of faith world-wide in the sick US financial market System and faulty US economic Policy.

John Paulson and Lloyd Blankfein are the Poster-boys for all that is rotten with Corporate America:

Who should go to jail? Fill in the Blank(fein).

The case also involves John Paulson, a hedge fund investor whose firm Paulson & Co made billions of dollars by betting the nation’s housing market would crash. This included an estimated $1 billion from the transaction detailed in the lawsuit, which the SEC said cost other investors more than $1 billion. Paulson was not charged.

http://mikk2.wordpress.com/2010/04/18/who-should-go-to-jail-fill-in-the-...

baby_BLYTHE's picture

people like Paulson would be gdoing fine every single year if they just stuck to their gold investments alone. Instead they risk putting many of their funds in totally insolvent Western Nation'ss debt and TBTF banks whose stocks are getting hammered in anticipation of the next (far larger in scale) crisis that is impending.

Long-John-Silver's picture

99% of the population have no idea what is going to happen to them.

baby_BLYTHE's picture

hopefully billionaries like Buffett got some Whiskey spiked in that bathwater. Soon much of the middle-class will be millionaries while billionaries see the majority of their net worth going up in smoke due to rampant inflation. 

Someone on ZH earlier said the next crisis would be one everyone could see coming, but no one was WILLING to do anything to prevent. Spot on, IMO. 

trav7777's picture

nobody has any clue what to do because economists and the people in charge do not understand the physical world.

There is literally NOTHING that can be done once aggregate energy rate of supply peaks.  The rate of activity based on that energy must also plateau and then decline.  To a financial system depending upon continued growth for the coupon, it's doom

baby_BLYTHE's picture

exactly, net energy inputs in decline means shorter supply and higher prices across the board (never mind monetary policy or debt/gdp). Most fail to recognize just how much a part oil is in the price equation of just about everything one consumes. No fiat currency based on debt can overcome this economic real world reality.

Fish Gone Bad's picture

The world is in a Malthusian trap.  How to get out is actually simple.  A lot of people need to no longer exist.  This can be accomplished with devastating wars, a real pandemic (did any poor nations die off from H1N1?), a meteor hitting the earth, some combination of the above, or some combination of the above and something I have not thought of yet.

And yes, the next depression will happen right in front of everyone and no one will think to get out of its way.  For some reason, people think bad things only happen to "someone else". 

Iggy's picture

It's sad that we would even bring this up but if you look at history most famines and depopulation events are caused by interuptions in supply. Preceded by economic or political problems. Prepare for the worst and sleep better at night.

Smiddywesson's picture

One EMP could knock out the power of everything from Ottawa to Miami, leaving everyone to starve.  War is obsolete when your enemy has placed themselves in the position where they have 3 days of food on the shelves and no way to bring in food without power.  

Fukushima Sam's picture

The consequences of an EMP are likely much worse than just starvation for many.  One massive EMP that knocked out all power around the globe would result in all nuclear power plants losing their cooling systems, causing all of them to melt down in one way or another, and resulting in hundreds of Fukushimas across the planet.  This would likely be the end for the human race and most of the rest of life on Earth.  Life would not end immmediately, but cancer and sterility would finish us off over the next few decades.

Die Weiße Rose's picture

Recession is when your neighbor loses his job.

Depression is when you lose your Job.

And Recovery is when Ben Bernanke and Tim Geitner lose theirs.


Stax Edwards's picture

Gas is 3.30 down in FL not too bad

disabledvet's picture

i see you've been upgraded to a "mommy picture" here.

Freddie's picture

Obam's gang are marxist looters.  They are looting the treasury.  Meanwhile - his fake union troops are marching to distract from Solyndra, Fast & Furious, plummeting poll numbers and his looting.  The "students" should be marching on the universities who got them in debt by raping them with tenured professors, worthless degress and $100,000 debts they cannot be discharged in bankruptcy

DormRoom's picture

Paulson hit it big in 08, because he followed Micheal Burry's newsletter, and shadowed the trade.

GLD liquidation soon, unless he sells off his position on the cheap to another hedgefund.

reload's picture

"Paulson hit it big in 08, because he followed Micheal Burry's newsletter"

Dont forget also that he and the squid colluded in the creation of extra shIt MBS/CDO garbage to bet against. Nice theivery if you can get away with it - and they did. But I wonder - did he buy all the City & boa stock to keep himself out of trouble and apperar patriotic. I am still amazed he and his collaborators are not doing hard time. If a deal was done obliging him to load up with wobbly TBTF stock in order to remain at liberty would any of us be suprised?