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John Paulson Says It's Time To Be Fully Invested

February 02, 2011
John Paulson, the legendary hedge fund manager who made billions betting against sub-prime debt has just released his year end letter.

2010 was a banner year for the Paulson group of funds. For example, the best performer was the Paulson gold fund that was up 35%. All in all, Paulson's funds produced over $8.4 billion of gross gains.

Paulson noted that his focus is now on special situations such as restructured equities.

"As high yield bonds now trade at par and yields have plummeted, our focus has shifted to restructuring equities as the driver of future returns. While returns in our current-pay portfolio are still decent, we believe going forward the highest returns will be in restructured equities, mergers and acquisitions, and event arbitrage."

Paulson also seems to be relatively bullish about the U.S. economy that he sees normalizing in 2011.

"We have spent the last year-and-half making restructuring investments in high quality assets at deeply distressed prices to maximize gains in an economic recover. In total, we've invested over $20 billion in more than 40 different transactions. Now that these companies have repaired their capital structures, their equity offers substantial upside appreciation relative to downside risk as we move toward economic normalization. This is the part of the cycle where we want to have long event exposure and do not want to be under-invested.


Paulson_Co-Q4-2010 -

Rating: 3.7/5 (9 votes)


Tighanx - 6 years ago    Report SPAM

It's Time To Be Fully Invested after stock market doubled?

Mony87v - 6 years ago    Report SPAM
The market is over valued by any and all measures.
Superguru - 6 years ago    Report SPAM

In dec 2010, When I said market is overvalued and I was considering selling or hedging, actually CM1750 said same thing to me in Dec as John Paulson is saying now..

"Selling now may be leaving money on the table. Bernanke has shown his willingness to artificially juice the market and the 3rd year of a Presidential cycle is usually a good one for stocks." - CM1750

and as Paulson put it - "...as we move toward economic normalization. This is the part of the cycle where we want to have long event exposure and do not want to be under-invested."
Kfh227 - 6 years ago    Report SPAM

We do have inflation coming so be aware of it.

I was 30% cash till 2 days ago when I bought he recent NCAV stock mentioned in the recent gurufocus 17 page report. Now about 20% cash.

Toddius - 6 years ago    Report SPAM
I'm about 10% cash, but I have to keep trimming positions to keep it there. I agree with the people that mentioned that maybe a better time to be fully invested would have been when the markets were in turmoil (late 2008, early 2009).

Paulson seems to view this higher market as "less risky" than the less expensive one of two years ago.
Tighanx - 6 years ago    Report SPAM
Buffet usually says he doesn't time the market. However, if you follow his "timing", it will be certainly better than following those that think they can.

In 2008, when the market dropped to something 8000-9000, he made his call to invest in stock market. Yes, the market dropped to under 7000. But who would think that's a worse call comparing to Paulson's call now?

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