Global Macro Trading Journal

[ralph00]

Quote from Ghost of Cutten:

What's great is that your risk is capped, and obviously that is worth something. Just like ALL market instruments, if you overpay for a characteristic, you lose money on average. But often, optionality is underpriced relative to taking a position in the underlying - and by refusing to trade options, you are incinerating large quantities of dollar bills every time you pass up such an opportunity.

If I had a dollar for every dollar I've incinerated ...


Nice fitch double downgrade today.

 

[ralph00]

"Whit" Tilson -9.5% in September, -29.5% YTD.

S&P off 7.8% YTD.

Sorry, that's unacceptable for "professionally" managed money. You almost have to make a deliberate attempt in order to be this bad.

http://www.marketfolly.com/2011/10/hedge-fund-performance-september-was.html

 

[Butterball]

Paulson's Advantage Plus flagship fund reported to be down 48% YTD. It's peak AUM was $19.1 billion during Spring of this year. So they pi**ed away a cool $8-9 billion in that fund alone.

Drawdowns of 50% are levels when senior staff will usually consider 'other oppurtunities' as high watermarks won't be seen again before gains of 100%. No more Christmas shopping with a fat performance bonus until 2014+. Looking at the wreckage in some other funds the downsizing won't be limited to Paulson alone.

 

[ralph00]

Paulson is finished. I expect the liquidation of his holdings has much to do with the unabated selling in stuff like BAC and C. Since roughly 99.5% of all trading in now algorithmic, this would lead to selling of other big financials, leading to selling of the market. One could do a lot worse than timing the exact bottom in financials/cyclicals than marking the moment JP announces he is no longer an owner of these turkeys and closes his fund.

http://twitter.com/#!/StockJockey/status/122702666513125376

Exhaustive research has led me to conclude that Paulson hit the skids a few months after he hired Alan Greenspan. Coincidence? I think not

 

[jj90]

Schadenfreude much ralph? When's your hedge fund starting up?

 

[Debaser82]

How much was Paulson down on his short before 2008 when it didnt pay of at first? Anyone any idea? Cheers.

 

[Martinghoul]

Quote from Debaser82:
How much was Paulson down on his short before 2008 when it didnt pay of at first? Anyone any idea? Cheers.

I am pretty sure it was done, effectively, through options (i.e. cheap CDS), so he couldn't have been down that much on it.

 

[Butterball]

From what I recall Paulson started the first short credit fund in the summer of 2006 and probably was underwater in the single digits or low double digits tops until late 2006 when the ABX indexes started turning way south. By the time New Century went bust in Feb/Mar 2007 his subprime short bets must have recouped all initial carry losses and then some.

 

[ralph00]

Quote from jj90:

Schadenfreude much ralph? When's your hedge fund starting up?

Paulson is irrelevant. The performance chasing monkeys who invested with him are getting their just rewards, though.

If you stop being a wiseguy and read the post, it's got an outstanding trading idea in it, one I certainly intend on following.

 

[jj90]

Oh I read every post in this thread for ideas. 1 thing I've noticed recently out of you ralph vs your earlier stuff is the tone of your posts. If there's 1 thing I've starting to be more attuned to in my trading, it's noticing signs of hubris in my trading and others. And you know what they say about hubris....