In 2006, hedge fund manager John Paulson realized something few others suspected-that the housing market and the value of subprime mortgages were grossly inflated and headed for a major fall. Paulson's background was in mergers and acquisitions, however, and he knew little about real estate or how to bet against housing. He had spent a career as an also-ran on Wall Street. But Paulson was convinced this was his chance to make his mark. Colleagues at investment banks scoffed at him and investors dismissed him. Even investors skeptical about housing shied away from the complicated derivative investments that Paulson was warming to. But Paulson and a handful of renegade investors such as Jeffrey Greene and Michael Berry began to bet heavily against risky mortgages and precarious financial companies. Timing is everything, though. Initially, Paulson and the others lost tens of millions of dollars as real estate and stocks continued to soar. Rather than back down, however, Paulson redoubled his bets, putting his hedge fund and his reputation on the line.
In the summer of 2007, the markets began to implode. By year's end, John Paulson had pulled off the greatest trade in Wall Street history, earning more than $15 billion for his firm-a figure that dwarfed George Soros's billion-dollar currency trade in 1992. He made billions more in 2008. Some of the underdog investors who attempted the daring trade also reaped fortune; others who got the timing wrong met devastating failure.
Written by the prize-winning reporter who broke the story in the Wall Street Journal, The Greatest Trade Ever is a superbly written, fast-paced, behind-the-scenes narrative of how a contrarian who foresaw the escalating financial crisis that outwitted Chuck Prince, Stanley O'Neal, Richard Fuld, and Wall Street's titans, amid the personal hubris and carnage of economic collapse, made financial history.
NEWS & OPINION: The Best Business Books of 2010 from strategy + business
Posted November 24, 2010, 10:28 PM with category of Publishing Industry
strategy + business's "best of" list is always a special treat—in large part because it's never just a list, but a series of essays. The magazine gathers together a different team of experts each year, and each takes the task of writing on their chosen category and the books in it. I've listed their picks below, linking to the essays at the head of each category.
NEWS & OPINION: The Greatest Gamble Ever
Posted April 20, 2010, 10:27 PM with category of Management & Workplace Culture
Gregory Zuckerheim's The Greatest Trade Ever: The Behind-The-Scenes Story of How John Paulson Defied Wall Street and Made Financial History tells of how Paulson "realized something few others suspected—that the housing market and the value of sub-prime mortgages we grossly inflated and headed for a major fall. " But it turns out that "The Greatest Trade Ever" may have been something very akin to a rigged bet. What the book didn't tell us (because it was unknown at the time) is that Paulson had shaped the portfolio of mortgages—hand-picking the bonds it contained for Goldman Sachs—that he bet against to make his fortune.
NEWS & OPINION: Books as Intellectual Assets in an Economic Discourse
Posted March 18, 2010, 1:30 PM with category of Management & Workplace Culture
Michael Lewis's latest book, The Big Short: Inside the Doomsday Machine, was released this week to a lot of media attention and bestseller lists. We'll review the book more in depth on this site and elsewhere over the coming weeks, but its very release is what's giving me hope this week.
You see, for all the doom-and-gloom surrounding publishing these days, publishers themselves have done a quietly masterful job of finding books that put the Great Recession, and what caused it, in focus over the last year and a half—Michael Lewis being but the latest (albeit one of the finest) voices in the choir that publishers have been directing.