This hedge-fund manager did his homework. (He and his team had been working on ways to short the housing bubble since 2005.) John Paulson looked past the happy narratives coming from the Bush Administration and the Wall Street bubbleheads, and discovered innovative ways to play the game in order to maximize profits. Timing and confidence in his analysis were the keys to his success.
Many "knew" how weak the housing market was during 2007. They "knew" there was an incredibly soft underbelly waiting to be exploited, but, despite the potential for windfall profits, relatively few had the guts and smarts to seize the opportunity inherent in the housing bubble, and ride it to historic success.
And don't think John Paulson didn't have to fly under the radar of the "big boys" in order to achieve huge, undiluted financial gains. He had to be secretive about his innovative strategies so that the entrenched investment banks didn't scuttle or sabotage his plans. Smaller funds aren't just "allowed" to openly score billion dollar gains without the big boys wanting in on the action. You can object to the hedge fund "game", but you can't argue with how Mr. Paulson played it. Perhaps the game is "unfair" and needs changing. That, however, will take many years of concerted effort to accomplish. In the meantime, those who know how to play the game will profit.
This is not just a lesson about financial investments.
Perhaps now is an opportune time to "fly under the radar", so to speak, and find gutsy, innovative ways to take advantage of deflated political entities. While hype and hope about Gov. Jindal is at an apex, now might be the perfect time to make long-term strategic moves to reinvigorate the inept Louisiana Democratic party, so it can compete better in the political "markets".
Here's a related excerpt from an excellent GQ article about Senator Obama, and his sense of timing, that might be worth some reflection:
I’ve interviewed and traveled with Obama numerous times since early 2004, just after he won his improbable Senate-primary victory in Illinois, and I’ve experienced the same mix of conflicted reactions as voters like Kara Asmussen: genuine excitement about discovering a politician you actually admire, followed by skepticism and a realization that Obama, who earned his political education in Chicago’s tribal wards, is more of an old-fashioned pol than you think. Michael Kinsley once said of Bob Novak, “Underneath the asshole is a nice guy, but underneath the nice guy is another asshole.” One way to describe Obama is that underneath the inspirational leader who wants to change politics—- and upon whom desperate Democrats, Independents, and not a few Republicans are projecting their hopes-— is an ambitious, prickly, and occasionally ruthless politician. But underneath that guy is another one, an Obama who’s keenly aware that presidential politics is about timing, and that at this extremely low moment in American political life, there is a need for someone—and he firmly believes that someone is him—to lift up the nation in a way no politician has in nearly half a century.
Obama recognized the soft underbelly of Clintonism this cycle, and is playing the game to win. He's not running for Vice President, as he could have done. In four years, he may move from the Illinois State Senate to President-elect.
A future post will discuss why it is too early to successfully combat the absurd media coverage of the presidential