The Greatest Trade Ever is a brilliant narrative of John Paulson’s sensational trade where his hedge fund bet against the market and made $20 Billion.
To be honest, I was bit apprehensive when I started with this book. This was 4th book in quick succession on the same topic for me and I feared it may not capture my interest. True, the story runs parallel to that of The Big Short, but The Greatest Trade Ever distinguishes itself with its dexterous and lucid style.
We spend the first half of the book knowing about John Paulson and his crafting of trade of the century. It’s an intriguing read about how Paulson, a rank outsider to mortgage industry became suspicious about it and went on his hunch to do research about housing sector. The most absorbing part is when his associate Pellegrini after months of painstaking research, pouring over data for days on end created the chart that cemented their intuition of a massive bubble in real estate.
I found the second half even more exciting as Paulson begins his wait for the dominos to topple after taking his massive bets. We also meet Dr. Mike Burry, who was first to identify the anomalies in housing and his growing frustration as his efforts to build the legendary trade are thwarted by his investors unable to understand his logic and unwilling to take the risk. Then there is Jeff Greene, Paulson’s friend and a real estate magnate, Graig Lippman, the Deutsche Bank trader who also built similar positions against housing.
When the actual meltdown began with blowing up of Bear Stearns, the book gathers real pace. Will Paulson and others be able to liquidate their positions? Will market turn so illiquid that they cannot sell their hedges? Will it turn positive once again? Will they squander off the gains? What next?
I just could not stop thinking about the fate of every player in this move. The idea that market can remain irrationally exuberant for more time than one can remain solvent actually kept my pulse running very fast as I longed to move on to next page.( I read this portion in a bus travelling from office to home, making my heartbeats run even faster!) In the end the vindication came, but the price paid by everybody including the world at large was very high.
A must read tale if you want to know about the relatively unknown investors who found that the emperor wore no clothes and profited from it.
Thank you for reading. I appreciate your time.
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