I took a quick spin yesterday through Gregory Zuckerman's The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History yesterday. I figured it for a reporter's quickie and I assumed it didn't deserve much time (then why did you read it at all?--ed. Ah, there you have me!).
But--surprise! It is a reporter's quickie, but it has at least one special virtue that I hadn't anticipated. That is: for a yokel like me, it probably gave me a better insight into the hedge fund craziness than a lot of more ambitious projects. I mean--here we have one somewhat bewildered and more or less invisible guy (okay, so he was first in his class, so were a lot of people)--somebody on nobody's radar--who had the good luck or good fortune to trust his gut and in one day made $1.25 billion.
I suppose you might say it was a bit more than that. Fortune favors the prepared mind. He did have some good research support (specifically, a researcher also willing to trust his gut). But what kind of poise must it take to go back to your backers every day and say "trust me," and then double down, and double down? Nothing about this was inevitable. Yes, "people knew" that the bubble was going to burst someday. But a lot of people didn't get it at all. And even among those who did--hey the landscape is littered with the parched bones of shorts who went insolvent while the market was still stupid.
I won't go so far as to say that Paulson "deserved" the c.$4 billion that he carted home during that one momentous year--that's a proposition too ambitious for me--but I guess I mind him getting it less than I would mind a lot of other things. You might go so far as to say he came by it honestly. So, not a great book, but a pretty good one, well worth a few hours' time. If you want the executive summary, go here.
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