If I was running money professionally like John Paulson and Bruce Berkowitz I might be very tempted to walk away from the game if I hit a home run like Paulson did with his credit default swaps or had a 10-year run like Berkowitz did from 1999 to 2010.
Because it really doesn’t matter what your long term track record is or how you explain to your investors that stock market investing requires patience and periods of underperformance, they turn on you as soon as you have a bad stretch.
Paulson I find a little more interesting that Berkowitz. I think Berkowitz has shown repeatedly that he can pick undervalued securities. I’ve wondered before if Paulson wasn’t more of a one hit wonder.
He recently spoke with his investors and had to discuss his brutal first half in the Advantage Plus Fund. Here are some notes.
If I were to dig deeper into some of his ideas I think I’d have a look at gold miners which have not moved much despite the price of gold, Hewlett Packard (HPQ, Financial) which seems to be a favorite of a lot of smart managers, and Transocean (RIG, Financial) which he thinks is worth $109 to $153 (currently $63).
A second article focuses specifically on the poor year Paulson is having. To tell you the truth the frequency with which the press and investors turn on fund managers encourages me. The majority of people just don’t understand that the stock market isn’t suddenly going to revalue an undervalued stock you have purchased. It takes time for the valuation to be realized either through specific event catalysts or performance of the company.
Over the past few months I’ve been buying oil companies with large land positions in emerging unconventional oil plays with full expectation that the stock market likely isn’t going to see the value that I see until those companies get well into their drilling programs. These stocks could just as likely be down six months from now as up. But a couple of years from now when they have increased production by 50% the market is going revalue them based on that production growth.
The beauty of investing your own money and not managing others. You don’t have to answer to irrational impatient investors. Here is the second Paulson article.
Because it really doesn’t matter what your long term track record is or how you explain to your investors that stock market investing requires patience and periods of underperformance, they turn on you as soon as you have a bad stretch.
Paulson I find a little more interesting that Berkowitz. I think Berkowitz has shown repeatedly that he can pick undervalued securities. I’ve wondered before if Paulson wasn’t more of a one hit wonder.
He recently spoke with his investors and had to discuss his brutal first half in the Advantage Plus Fund. Here are some notes.
If I were to dig deeper into some of his ideas I think I’d have a look at gold miners which have not moved much despite the price of gold, Hewlett Packard (HPQ, Financial) which seems to be a favorite of a lot of smart managers, and Transocean (RIG, Financial) which he thinks is worth $109 to $153 (currently $63).
A second article focuses specifically on the poor year Paulson is having. To tell you the truth the frequency with which the press and investors turn on fund managers encourages me. The majority of people just don’t understand that the stock market isn’t suddenly going to revalue an undervalued stock you have purchased. It takes time for the valuation to be realized either through specific event catalysts or performance of the company.
Over the past few months I’ve been buying oil companies with large land positions in emerging unconventional oil plays with full expectation that the stock market likely isn’t going to see the value that I see until those companies get well into their drilling programs. These stocks could just as likely be down six months from now as up. But a couple of years from now when they have increased production by 50% the market is going revalue them based on that production growth.
The beauty of investing your own money and not managing others. You don’t have to answer to irrational impatient investors. Here is the second Paulson article.
