IT'S GOOD TO BE SHORT!!!

Goldman Sachs and hedge fund manager John Paulson went short on the Big ShitPile and MADE A LOT OF MONEY. Why didn't more people see this opportunity?


Goldman Bet on Subprime Mortgage Drop for Most of '07 (Update1)

By Christine Harper

Jan. 14 (Bloomberg) -- Goldman Sachs Group Inc., the world's largest securities firm, said it bet on declines in the subprime mortgage market for most of last year, as many of its competitors suffered record losses from the business.

``During most of 2007 we maintained a net short subprime position with the use of derivatives and therefore stood to benefit from declining prices in the mortgage market,'' Chief Accounting Officer Sarah Smith wrote in an Oct. 30 letter to the Securities and Exchange Commission made public today.

Goldman earned a record $11.6 billion in fiscal 2007 while competitors including Morgan Stanley and Bear Stearns Cos. posted quarterly losses and annual profit declines.

Record profits for fund shorting subprime
By James Mackintosh
Published: January 15 2008 04:00 | Last updated: January 15 2008 04:00
Finncial Times

It was the greatest opportunity of his career, hedge fund manager John Paulson told investors in 2006.

And so Mr Paulson raised a dedicated $1bn fund to profit from problems he predicted in the US subprime home loans market.

Mr Paulson’s Credit Opportunities I fund leapt 550 per cent from January until the end of October, making it one of only 30 last year to more than double investors’ money, according to Chicago-based Hedge Fund Research.

“There’s never been a trade of this size of profit in the history of financial markets,” says Arki Busson, chairman of EIM Group, which has $13bn invested in hedge funds.

Three of Mr Paulson’s other funds more than doubled their money, giving New York-based Paulson & Co a spectacular set of returns and an appeal to investors that propelled it from a mid-ranking firm to one of the world’s biggest hedge fund managers.

Investors estimate that across all its funds Paulson & Co has secured profits from subprime of more than $12bn.