The man who earned 3.7 billion Dollar with the subprime crisis
Just like the Chinese philosophy jing jang tells us that every medal has two sides also the subprime crisis didn´t just produce losers. But as you can imagine when so many people nearly loose 1 Trillion USD the winner on the other side must make a real big fortune and that´s exactly what John Paulson a 52 year old hedge fond manager from Manhattan did. He earned 3,7 Billion USD which could be the highest annual profit of the history of mankind.
But who is John Paulson and how could he earn such a big amount of money in such a short period of time?
John Paulson´s story began in New New York where he was born and studied later he even went to Harvard. How to deal with money he propably learned when he worked for the fabulous financial genius Leon Levy, he also worked for Bear Stearns and the financial investor Gruss Partners. Then in 1994 John Paulson founded his own company and issued some Hedge funds. After loosing very much money by betting that the corporate bonds would fall in 2005 he started to search for new financial bubbles and finally discovered the beautiful world of the “Subprime Mortgages”. But the question was how to make money with this bubble? So John Paulson developed a complex but in the root idea still very easy speculation strategy. His plan was to collect as many “Credit default swaps” as he could get, “credit default swaps” are something like issues which hedge you of financial losses of credits. So in good times this “Swaps” cost less but in bad times when the credit risk soars there “swaps” rise in value enormously. Well since 2005 John Paulson didn´t do something else than collecting “Credit default swaps” and in the beginning he even made red ink with that strategy. But when Amriquest one of the biggest providers of suprime-credits a fine of 325 Million USD in order to avoid a process for deceptive practices John recognised how phony the market was and issued a fund just to bet against the housing market. It was 2006 and his fund against the housing market didn´t worked well not before the and of 2006 when more and more people got nervous hsi fund closed with a plus of 20 %. Now John Paulson got really amped up about profiting from this bubble and issued a second fund witch also bet against the housing market. And the rest is history the housing bubble burst and John´s on December 31th 2007 John´s first fund closed with 590 % and his second one with 350 %.
However the question how much money he really made can be answered exactly cause Mr. Paulson is very discrete.There are no official affirmations for the definitive altitude but experts assume that the earnings amounts to 3,7 Billion USD. The Magazine Monthly Trader even wrote that this could be the highest annual profit of the history of mankind and placed him on the first place of a list of the TOP 100 fund managers.
John Paulson now lives with his wife and his two daughters in a 2600 aces big city house on the Upper-East-Side, New York. Apropos he bought this house in a forced sale…
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3 Responses to “The man who earned 3.7 billion Dollar with the subprime crisis”
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Seriously, good data.
but you need to spell check and fix grammar before I’ll digg it.
[...] How did he do it? By betting that all those holders of subprime mortgages (i.e., the middle class) wouldn’t be able to pass go. His full story is here. [...]
This is most likely the worst grammar I have ever witnessed in an article. Most of the facts are very accurate but I do have one comment; when you noted that he now lives in a 2600 aces house were you referring to acres? If so, your a complete moron considering 2600 acres = roughly 4 square miles which would make it almost as large as the Upper East Side in its entirety. Now I may be wrong; if so, that house is BALLIN’.