Friday, January 28, 2011
WSJ: John Paulson Bests $4B Gains of 2007, with $5B Year in 2010 (Fund My Mutual Fund)
We'll leave the societal discussions of our currently structured financial incentives for another day [Apr 8, 2008: Hedge Fund Manager - Good Work if You can Get It], but the WSJ reports that John Paulson has surpassed his legendary 2007 haul of $4B, with a $5B payday in 2010. As we've outlined in the past, after betting against the mortgage market, Paulson turned around and bet with the government big time, as moral hazard is the new way to gain epic generational riches. What is interesting is the largest hedge funds have now grown so immense in size, [Mar 8, 2010: List of Largest Global Hedge Funds] they don't even have to have exceptional performance to create once unheard of wealth. Indeed, the average hedge fund in 2010 lagged the S&P 500's performance - by about a third. And lagged the average mutual fund by nearly half. Indeed, once you become a certain size it becomes increasingly difficult to beat the market. [Mar 29, 2010: Are John Paulson's Hedge Funds Now Too Big to Outperform] Whatever the case, with this incentive program, expect a continued march of the country's best and brightest minds into this one niche field.
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