What is Digg?166 Comments
- complacentpanda, on 01/13/2009, -8/+159This guy deserves all the money he made. While these other investors were foolishly following the herd and listening to their ilequip financial advisors and failing to do any research for themselves, this man put in the time and the effort to understand how the economy was working. Of course things are going to fail if you loan out money at (eventual) high interest rates to people who could never afford to pay them back. House prices aren't going to double every three years. Insane that people are mad at these guys.
Be mad at yourself if you lost money. Learn some economics and let's stop taking money away from the skillful. ***** that type of socialism. - tavallai, on 01/14/2009, -1/+136He's not trading in people's misery. He was prescient enough to capitalize on everyone else's greed and stupidity. ***** brilliant, this man.
- korvan504521, on 01/13/2009, -3/+126So, this man was wise enough to see the coming meltdown, and acted accordingly.
Companies that collapse because of short selling collapse because they didn't maintain a strong fundamental value, or any sort of hedge against hard times. they assume that they'll be able to sell their stock (a fluctuating commodity with largely perceptual value) at any time to recover from their mistake,when in reality their mistakes have a huge impact on the value of their stock. My own employer is a private company with employee owned stock. if something goes wrong, they can't just sell a piece of it to get a cash influx, so the company has built up a large nest egg of cash in safe investments in case of a major failure in a project. This was begun by our founder and has remained a core tenant for over a hundred years.
Maybe these other companies should have done the same, or perhaps they deserve what they got. - thedivinelyevil, on 01/14/2009, -3/+114all i can say is, "well played, sir."
- OneRottenTomato, on 01/14/2009, -1/+105Short selling is now illegal? A guy predicts bad weather is coming and when that day comes he is then punished for it? What the hell? He stands to lose just as much on a rising market as those that buy on a failing market. I guess irresponsible CEOs are the only ones allowed to profit on their failing business.
- Snoosy, on 01/13/2009, -7/+100His name is John Paulson.
- vidaliasweet, on 01/14/2009, -1/+56I'd rather a man bet against me than demand I pay when he loses.
- rolf, on 01/14/2009, -0/+54The article's author is just trying to play up some drama. It's all very childish, actually.
He didn't bring about the economic collapse, he's not to blame. - spuddly, on 01/14/2009, -1/+45"Left unexamined is the uncomfortable moral dimension of Paulson’s achievement. If he saw all of this coming, was it right for him to keep his own counsel, quietly trading while the financial system melted down?"
This is stupid. I've been an (amateur) stock market and currency trader for a few years now and huge numbers of people as early as 2003-2004 were warning of a US bubble about to burst and not to invest in the US dollar or stock market (although not many traders based in the USA for some reason). I don't think anyone thought it would be this big but certainly many people knew it was coming. - fyngyrz, on 01/14/2009, -0/+40Yep. Another thing -- he didn't bet against homeowners. I'm a homeowner; that means *I* own my home, not a bank or a mortgage company. I bought it for cash, after waiting four decades until I could actually afford it. What he did had no affect on me in any major way. I paid no interest (in fact, I earned a few percent interest on my savings accounts for many years, so I didn't even have to come up with the entire purchase price), no one required or requires me to carry any particular amount of insurance, and basically as long as I pay the taxes, I'm good to go regardless of what this fellow does, or doesn't, do. I bet that I could save the money, and that in doing so, I'd come out *really* far ahead financially. And I was right.
This fellow simply bet that people had been taking on debt they could not afford, for purchases that did not have the inherent value to back the debt they had assumed.
When you take out a loan, you're gambling. You gamble that the bank won't call the loan. They can, you know. You're gambling that your home will (at least) retain its value. No certainty of that, surely. You're gambling you'll be able to maintain an income of sufficient magnitude that you'll be able to pay for the mortgage, the insurance, the taxes, the furnishings, the repairs and maintainance, the utilities, and of course, for any actual improvements you might want to make. Income isn't guaranteed for most people.
This guy looked clearly at the risks some people were taking and said to himself... "I can't see this working out. I'm betting the other way."
I think if people blame him, they're *really* not paying attention to whose fault all this actually is. - awesometastic1, on 01/14/2009, -2/+37He's brilliant. Not evil. I mean think about it. Had he actually somehow managed to get everybody's attention and warn them about the impending market crash everyone would have listened about as well as they listened / are listening to Ron Paul about the economy, namely not really at all.
So why not make a quick buck on it and keep it to yourself? The only outcome that changes is you get rich; everybody else gets poor like they were going to anyways. - OrangeTide, on 01/14/2009, -0/+31How is it evil to point out that the housing bubble was going to burst? A lot of people were saying this post 2005 and it only got louder and louder by 2007. Of course many industry leaders said not to take these bubble people seriously and that home values have historically only gone up or some such nonsense.
- meekrob, on 01/13/2009, -4/+28SIR! Members of "Project Mayhem" have no names, SIR!
- GeorgeStone2, on 01/14/2009, -1/+20Yeah, everyone would have listened to this man if he said that it was going to be this bad...:rolleyes:
He did good. Back off. - brainflakes, on 01/14/2009, -3/+20I understand. In death, a member of Project Mayhem has a name.
- inactive, on 01/14/2009, -1/+18You have to consider the possibility that God does not like you. He never wanted you. In all probability, he hates you. This is not the worst thing that can happen.
- Lynx77777, on 01/14/2009, -0/+16Really good article, a great read.
Stocks and Shares always has a winner and loser, there's nothing evil about that. The whole concept of buy low and sell high involves a lot of little people losing their money while the few in the know cash in. This is nothing different.
The banks are to blame for the mess we're in with all the subprime lending they were doing. This guy just spotted it and made some money on the diaster they created.
Of course the CEO's of these banks want a scape goat, and short sellers are an easy target - they need to justify their bonus somehow so they can get that last pay off before they get another Government bail out. - LocalDocal, on 01/14/2009, -0/+15Exactly.
I'm glad you brought this up because this article sounded exceedingly silly. It talks about how people who are smart enough to predict what is going to happen somehow did something morally wrong. It even talked about whether it was right for him to keep such knowledge to himself.
Aside from the reality that this kind of thing is done all the time (you don't make money by telling everyone your secrets), there's also the reality that no one would have believe him. Who the hell would believe you when you tell everyone that their actions is going to result in a massive financial crisis? - draculthemad, on 01/14/2009, -2/+17Socialized risk, Privatized rewards.
IE: The rich get a bailout from the government whenever they collapse, but they keep whatever short term money they made before that.
This isnt new, its been like this since the Savings and Loan scandal. Coincidently, its always been a GOP administration that makes with the big bailouts.
People bitch about the tech bubble, but no one tried to offer them a bailout with a "dirty spendthrift liberal" in office. - Charlotte_Web, on 01/14/2009, -0/+13He didn't have any more insight into the situation than the rest of us. The other side of the coin is, if the market had suddenly rebounded, then he would have lost out, and nobody would be talking about him.
Nothing wrong with what he did. In fact, it's a shame more fund managers didn't do the same thing. - TigerStar337, on 01/14/2009, -3/+16Is the USA a capitalist country, a communist country, or a socialist country? If the USA is a capitalist country then why is Paulson a villain?
- NJank, on 01/14/2009, -0/+12"A guy predicts bad weather is coming and when that day comes he is then punished for it"
that's what we do with witches... - GeorgeStone2, on 01/14/2009, -0/+12http://www.economist.com/finance/displaystory.cfm? ...
Did somebody say, hedge funds?
Porsche can play the game better than any. - ladyarcher85, on 01/14/2009, -2/+14Oh damn and I thought they were talking about this.
http://tinyurl.com/6lobcn - coyote1284, on 01/14/2009, -1/+13Your mom goes down often.
/You left yourself wide open, someone was bound to say it. - charlie6969, on 01/14/2009, -1/+13You don't beat up Cassandra for being right. :)
And I agree with bigtoes. Seems he would be a better choice for the treasury post than the guy that couldn't get his OWN taxes right! - synapz, on 01/14/2009, -0/+11So what? Is profit some kind of bad word?
- KrisfromFlorida, on 01/14/2009, -0/+11Here is an example :
1, Apple stocks are $100
2, You think they will go down to $90 at least
3, You tell your broker you want to short Apple stocks
4, Contract is made, now you are waiting for stocks to go down
5, If they go down, any amount basically, you profit from the decrease
(Profit= amount of decrease x number of stocks you are holding)
6, If they go up, you start losing money, until it comes back down to $100
(Loss= amount of increase x number of stocks you are holding)
If it goes your way (decrease) ,you can profit big (imagine it goes down to like $50, you make a load of money .
If it goes against you (increase), you can lose your shirt .
Whenever you want, you can get out, by cashing in your current position . - bigtoes, on 01/14/2009, -0/+11As penance for his sins this John Paulson should be forced to become Secretary of the Treasury . That will teach this guy not to be so brilliant & money savvy .
- Trollbane, on 01/14/2009, -1/+11Like said above, this guy is hardly a villian.
Anyone who can make a profit legally in this sort of situation deserves his money. - tattertech, on 01/14/2009, -1/+11Sure, by using the same information available to everyone else.
- Niemer, on 01/14/2009, -0/+10Brilliant
- Remelox, on 01/14/2009, -0/+10I did, but I got up to about $5 and purchased some Hot Wheel cars instead.
- vidalsasoon, on 01/14/2009, -0/+9not a bad analogy but you need to get out more.
- lis880, on 01/14/2009, -0/+9Now that's quotable.
- lis880, on 01/14/2009, -1/+9EXACTLY.It's kind of like playing Halo you know where the sniper rifle is and the best spot to snipe.Now is it cheating if you have this information? No it's in the game.Why should he be punished for winning?
- inactive, on 01/14/2009, -0/+8“The shorts and rumormongers succeeded in bringing down Bear Stearns,” - C.E.O. Dick Fuld of Lehman Brothers
no DICK, your bad bets and shortsightedness brought down bear stearns.
kudos to the man who knew how to capitalize on other people's stupidity. - mithrasinvictus, on 01/14/2009, -0/+8And instead of just words, he staked his money on his predictions. If more people had done this maybe someone would have started to pay attention.
- designerutah, on 01/14/2009, -0/+7Morally, predicting doom to a market (and profiting from it) is no different from predicting boom to a market (and profiting from it). The prediction doesn't cause the doom/boom.
- reddikilowatt, on 01/14/2009, -0/+7I was watching a lot of CNBC thought the fall, and hearing idiots like Cramer complain about how the shorts were ruining the market really made me realize that most of these guys aren't the least bit interested in free markets. Without short sellers there wouldn't have been a market once the credit windows closed.
But, just like repo men and undertakers, short sellers will never be loved by the public. - Mujokan, on 01/14/2009, -0/+7Shorting has its benefits and its dangers, like other derivative products. Short-term speculative shorting can be dangerous if it becomes self-feeding.
But the problem here wasn't really so much the people who won the bets; it was the people who lost them. The compulsive gamblers of the financial world who couldn't quit. Even more than that, it was the whole system that allowed these guys into the casino, and made it so easy for them to borrow money to gamble.
This level of complexity and debt in trading should not have been permitted to develop in the first place. We shouldn't have been in a situation where this guy could walk out with $3 billion of money that was lent to the people he beat. - d3adly21, on 01/14/2009, -0/+7This guy is a financial genius.
- Murdats, on 01/14/2009, -0/+7they said "your depressing, stop being depressing, go away I am trying to tell these people how they can be happy and rich forever so they can give me money and I can be happy and rich forever"
then they said "OH GOD what craziness is this? who could ever have seen this comming, noooooooooo..." - moulin1, on 01/14/2009, -0/+7Not really. There are several rumors going around and so said the (now updated) wikipedia entry for John Paulson. But according to NY Daily News, Bloomberg and other major media outlets there is no truth in it.
- GawtMilk, on 01/14/2009, -1/+8I agree with syntaxgs. There's a natural flow of wealth from the uneducated or ill-informed to the educated elite. Where we disagree is how those select, intelligent few get to keep their profits and rewards.
The man earned it, he deserves to the money. Best case scenario would be him setting up some kind of grant / scholarship foundation to reward other intelligent people who make smart decisions.
We are entirely a culture / economy based off of rewards and punishments. You do well in school, you get a good grade. You work hard, you get paid well. There's nothing in that system that says that the people who lost should be reimbursed for making bad decisions / choices.
Plus, the people who "lost" their homes really only "lost" the down payments on their houses, which were generally worthless in the first place (which caused the whole mess). They didn't "lose" what they couldn't afford in the first place.
I hope this Paulson fella spends his money wisely, and judging by how he attained it, it seems like he will. $3b can do a lot of good in this world, much better things than simply giving it to homeowners who took out loans they couldn't afford. - synapz, on 01/14/2009, -0/+6@GawtMilk:
I disagree about your best case scenario, but I think you hit the nail on the head with everything else you said. The free market provides incentive for distributing his money the most beneficial way: reinvestment.
This guy obviously knows the ins and outs of the business world, and because he was left alone to make his billions, he's now in a position to improve the business world by selecting those companies that are likely to do well in the future. His reinvestment will lead to the expansion of efficient companies, providing for more jobs and greater wealth.
I can't believe people have the gall to complain about the people helping us the most. - doktorrocket, on 01/14/2009, -0/+6You sell a stock that you don't actually own, and have some period of time to come up with it (say 3 months). You sell it at today's price. So if the price goes down, in three months you buy the shares to cover your short sale, and pocket the difference from the lower price.
If the price of the stock goes up, though, now you have to buy the shares for more than you sold them for 3 months ago, and you lose money. It's a way to bet that the stock price is going down. - ArielMT, on 01/14/2009, -0/+6Please clarify. What is this "ecology of evil" you speak of? Do you believe it evil to predict that markets can't wax forever and must eventually wane? Do you believe it evil for one making such predictions to put his money where his mouth is? I don't understand what you mean.
- dynamojoe, on 01/14/2009, -0/+6Basically it's a bet that a stock will do poorly. You promise X number of shares to someone at some future date and they pay you for them now. They're betting that the stock price will go up and they'll get the stocks cheaply. You're betting that the stock will go down and therefore you pocket the difference between what you were paid and the lesser value of the stock you have to buy at that future date.
http://en.wikipedia.org/wiki/Short_(finance)
(I think. I'm a buy-and-hold kind of investor myself) - fyngyrz, on 01/14/2009, -0/+6Daedalus -- my father started me saving by putting some money in an account for me when I was ten, and explaining interest and compounding to me in a way I could understand. Subsequently, I put my share of all my gigs as a teenage musician into that account, then prodded it the best I could as I worked in various engineering gigs. I actually saved more as a teenager, because I was living at home, but earning pretty well.
When I finally found what I was looking for (an older church to re-purpose), it turned out to be a lot less expensive than I'd planned on (NE Montana real estate values a big factor in that) and so we (my sweetheart and I) used the difference to build an interior.
Worked out really well. Lots of sq feet, tons of cool spaces, huge home theater... and no debt. Here are some pics:
http://www.flickr.com/photos/fyngyrz/sets/72157600 ... -
Show 51 - 100 of 173 discussions
Browsing Digg on your phone just got easier with our enhancements to the 
© Digg Inc. 2009
— Content created and posted by Digg users is