Thursday, August 13, 2009

Methinks Master Paulson will be adding to his bets

Pragmatic Capitalist Blog:

The equity portion of the Paulson portfolio is heavily weighted towards three sectors: gold, financials and healthcare:

He is making three heavy bets here on very different macro themes.The gold and healthcare plays appear to be a form of cautious optimism in the reflation trade. The gold trade also has an element of inflation and/or caution. The banks, however, are a pure & speculative play on recovery. :

In a telling recap of Paulson’s initial experiences betting against the bubble, the Wall Street Journal notes: “Housing remained strong, and the fund lost money. A concerned friend called asking Mr. Paulson if he was going to cut his losses. No, 'I’m adding’ to the bet, he responded, according to the investor. He told his wife, ‘It’s just a matter of waiting,’ and eased his stress with five-mile runs in Central Park.”

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