Friday, June 24, 2011

John Paulson is Not Perfect

John Paulson Also Is Taking a Bath on Gold Mining Stocks

I have nothing against John Paulson, he made the greatest trade in history and you have to respect that. If you haven't read Greg Zuckerman's book on this I highly recommend it. The point I want to make is that there are many money managers who place large bets based on prediction and nobody can be right 100% of the time. You will have spectacular successes and equally spectacular failures. One of Paulson's funds is down 20.9% for the year. You can have a small part of your money with a manager like this but your core money should be invested in such a way where you have a methodology that puts the odds of success in your favor, doesn't rely on predicting anything, and avoids the large losses (like 20.9%) that can take years to recover from.

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