Infinite Unknown

- John Paulson Loses Over $300 Million On Friday’s Gold Tumble (ZeroHedge, April 13, 2013):

There were many casualties following Friday’s 4% gold rout, but none were hurt more than one-time hedge fund idol John Paulson, who according to estimates, lost more than $300 million of his own money in one day.

Per Bloomberg: “Paulson has roughly $9.5 billion invested across his hedge funds, of which about 85 percent is invested in gold share classes. Gold dropped 4.1 percent today, shaving about $328 million from his net worth on this bet alone.” This is merely the latest insult to what has otherwise been a 3 year-long injury for Paulson and his few remaining investors, whose very inappropriately named Advantage Plus is among the bottom 10 hedge funds for the third year in a row. Yet despite being a one-hit wonder thanks to one lucrative idea (long ABX CDS) generated by one of his former employees (Pelegrini), Paulson still has been lucky enough to somehow amass a $10 billion personal fortune which can have a $300 million downswing in one day, even if it is in an asset class which eventually will go only one way – up. Unless, of course, like so many other fly by night billionaires, Paulson too hasn’t somehow managed to lever up all his equity into numerous other downstream ventures, and where a $300 million blow up leads to margin calls and other terminal liquidity outcomes.

More:

“The recent decline in gold prices has not changed our long-term thesis,” John Reade, a partner and gold strategist at Paulson & Co., said in an e-mailed statement. “We started investing in gold at $900 in April 2009 and while it’s down from its peak to $1500, it’s up considerably from our cost.”

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Tags: Economy, Global News, Gold, Hedge Funds, John Paulson

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In this interview with investor Kyle Bass from Day 1 at AmeriCatalyst 6th of November 2011, in Austin, Texas, Bass discloses his discussion about the economic crisis with a senior from the Obama Administration. According to Kyle Bass the basic solution coming from this senior was: “We’re Just Going to Kill the Dollar”.

Killing the US Dollar in this context means keep printing more US Dollars in order to weaken the dollar to make exports cheaper through inflation. Massive inflation might be the answer for the Obama Administration, but in the process your purchasing power will be destroyed. And because the US Dollar is the world’s reserve currency the eventual impact of inflation would have an impact that would reach far beyond those holding US Dollar assets.

Thousands of paper currencies has come and gone over the years and there is no question if the dollar, or the euro for that sake, will have its value go to zero; the question is when?

Tags: Barack Obama, Economy, Fed, Federal Reserve, Global News, Government, Hedge Funds, Hyperinflation, Inflation, Kyle Bass, Obama administration, Politics, Quantitative Easing, U.S.

- Friday Farce: 16 Year Old Outperforms 99% Of Hedge Funds: “Oh My Gosh, That’s So Easy, I Have To Do This” (ZeroHedge, Feb 8, 2013):

Forget Ackman, Einhorn, Bass, And Hendry. There is only one name in the world of equity market performance in 2012 – Rachel Fox, of ‘Desperate Housewives’ fame. With a 30%-plus performance, the day-trading debutante has turned from actress to activist as she day-trades her way through the day. The 16-year-old actress who made 338 trades last year, based mostly on technicals, “”…fell in love with the idea and the concept of being able to just buy something, have it go up, or have it go down, depending on which way you bet it and have it make you money. I thought, oh, my, gosh, that’s amazing, and so easy, I have to do this.” If ever there was a sign of the extreme bubble that central planning has re-created for us – it has to be this. Her advice: “you have to really just trade on your own instincts and not just be like, oh, this person says this is great, let me just go for it.” LOL, OMG, IKR ;-( Our advice: next time readers are discussing stock tips with a random employee of Hustler Club, Scores or Spearmint Rhino – don’t just stare, listen! Said ‘random employee’ is almost certainly outpeforming the “smart money”, and the broader market, by a wide margin. Thank you Ben.

Tags: Economy, Global News, Hedge Funds, Stock Market

- Apple, Big Hedge Fund Stars & The Sell Side/Vaudeville Act To Burn Your Hard Earned Money As A Punchline That’s Just Not Funny (ZeroHedge, Feb 7, 2013)

Tags: Apple, Economy, Global News, Google, Hedge Funds, Nasdaq, Stock Market, U.S.

- Goldman Sachs And The Big Hedge Funds Are Pushing Leverage To Ridiculous Extremes (Economic Collapse, Jan 14, 2013):

As stocks have risen in recent years, the big hedge funds and the “too big to fail” banks have used borrowed money to make absolutely enormous profits.  But when you use debt to potentially multiply your profits, you also create the possibility that your losses will be multiplied if the markets turn against you.  When the next stock market crash happens, and the gigantic pyramid of risk, debt and leverage on Wall Street comes tumbling down, will highly leveraged banks such as Goldman Sachs ask the federal government to bail them out?  The use of leverage is one of the greatest threats to our financial system, and yet most Americans do not even really understand what it is.  The following is a basic definition of leverage from Investopedia: “The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.”  Leverage allows firms to make much larger bets in the financial markets than they otherwise would be able to, and at this point Goldman Sachs and the big hedge funds are pushing leverage to ridiculous extremes.  When the financial markets go up and they win on those bets, they can win very big.  For example, revenues at Goldman Sachs increased by about 30 percent in 2012 and Goldman stock has soared by more than 40 percent over the past 12 months.  Those are eye-popping numbers.  But leverage is a double-edged sword.  When the markets turn, Goldman Sachs and many of these large hedge funds could be facing astronomical losses.

Sadly, it appears that Wall Street did not learn any lessons from the financial crisis of 2008.  Hedge funds have ramped up leverage to levels not seen since before the last stock market crash.  The following comes from a recent Bloomberg article entitled “Hedge-Fund Leverage Rises to Most Since 2004 in New Year“… Continue reading »

Tags: Economy, Global News, Goldman Sachs, Hedge Funds, Nasdaq, Stock Market, Wall Street

- 88% Of Hedge Funds, 65% Of Mutual Funds Underperform Market In 2012 (ZeroHedge, Jan 5, 2013)

Tags: Economy, Global News, Hedge Funds

- Paying 2 And 20 For What Again? Hedge Funds Underperform Stocks For Third Year Running (ZeroHedge, Dec 13, 2012)

Tags: Economy, Global News, Hedge Funds, Stock Market

- Greek Government Bonds Jump 12% As Buyback Means Early Christmas For Hedge Funds (ZeroHedge, Dec 3, 2012):

Greek Government Bonds (GGBs) jumped by over 12% today to over EUR40 – by far the highest post-PSI – as fast money floods the limited size illquid market to front-run the Greek buyback. Every day that goes by means less and less benefit for the Greek people as the discounted price of buying back the debt – with all of the money that Greece doesn’t have, goes up. This is a perfect example of greater-fool-theory at work as everyone knows that if this price gets too high, the Greek government (via Troika) will (should) reneg on the buyback which will cause GGB prices to plunge back towards zero. What many misunderstand is that the buyback crystalizes the losses for banks that currently carry this worthless paper on their books at Par and garner the carry (and accruals) and thus in true European fashion, the unintended consequence of this action lines the pockets of fast-money hedge funds along for the short-ride and drains any pretense of capital from the Greek banking system.

Tags: Bonds, Debt, Economy, EU, Europe, Global News, Government, Greece, Hedge Funds, Politics

- Kyle Bass: Fallacies Such As MMT Are “Leading The Sheep To Slaughter” And “We Believe War Is Inevitable” (ZeroHedge, Nov 17, 2012):

Below are some of the key highlights from Kyle Bass’ latest, and as usual, must read letter:

On central banks and the final round of global monetary debasement:

Central bankers are feverishly attempting to create their own new world: a utopia in which debts are never restructured, and there are no consequences for fiscal profligacy, i.e. no atonement for prior sins. They have created Potemkin villages on a Jurassic scale. The sum total of the volatility they are attempting to suppress will be less than the eventual volatility encountered when their schemes stop working. Most refer to comments like this as heresy against the orthodoxy of economic thought. We have a hard time understanding how the current situation ends any way other than a massive loss of wealth and purchasing power through default, inflation or both. Continue reading »

Tags: Barack Obama, Ben Bernanke, Bonds, Collapse, Debt, Dollar, Economy, EFSF, ESM, EU, Europe, Fed, Federal Reserve, Global News, Government, Hedge Funds, Japan, Keynesianism, Kyle Bass, Obama administration, OMT, Politics, Quantitative Easing, Society, U.S., War

Related info:

- How To Buy Bullion (What To Ask And What To Own):

As far as precious metals go, you need to:

1. Own actual Bullion
2. Store it yourself (not in a bank)

Only physical gold is real. Do NOT own soon-to-be worthless paper!

- Hugh Hendry: “I Have No Idea Where The Stock Market Is Going To Be”… But “I Am Long Gold And Short The S&P” (ZeroHedge, Oct 25, 2012):

One of the best presentations at this year’s Economist Buttonwood gathering (which is still being live-streamed here), was, as usually happens, Hugh Hendry. The contrarian Scotsman, who describes his style as one where he “positions ourselves outside the accepted belief system”, managed to say in 15 minutes what takes most pundits hours, and that’s without the appendices, charts, long-winded essays, and graphs. Because when it comes to conveying ideas, simplicity always wins, and few are as good at speaking in simple, logical terms, as Hugh Hendry. Continue reading »

Tags: Barack Obama, Bonds, China, Debt, Dollar, Economy, EU, Europe, Fed, Federal Reserve, Germany, Global News, Gold, Hedge Funds, Hugh Hendry, Hyperinflation, Inflation, Obama administration, Politics, S&P 500, Society, Stock Market, U.S., Wall Street