John Paulson Quotes
104 John Paulson Quotes
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[On leveraged buy out firms such as KKR, Odyssey, E. M. Warburg, Pincus & Co and Allen & Co] They were very different than the big investment banks like Goldman. I think the wealthiest man on Wall Street at the time was Charlie Allen, who ran a small bank and made exceptional returns. Like Charlie Allen, Leon Levy and Jack Nash were far wealthier than the senior partners at the other banks. They were the ones on the Forbes 400 list, not the presidents of the investment banks. Although their corporate finance businesses were tiny and they didn’t have the prestige that the larger banks did, for me, I found these people fascinating. I was more attracted to the principle business than the agency side.
John Paulson
[Even if he couldn’t envision himself being on the Forbes 400 list, at least he wanted to work for them.] I called them the financial entrepreneurs. Those are the people I gravitated to, and I wanted to learn what they were doing.
John Paulson
[On launching Paulson Partners in 1994 starting with $2 million of his own money and sending out 500 announcement cards to potential investors] Although I had a lot of contacts. I didn’t have a lot of money. I sent those announcement cards out to everyone I knew, and I thought the phone would ring and everyone would be calling to invest. Well, the phone never rang. I got only one card back from Ace Greenberg offering congratulations. [On then picking up the phone and calling the potential investors] Some did provide a sliver of encouragement and said, ‘John you know, I like you but you don’t have a track record, so come back when you do.’
John Paulson
I started managing the small amount of money I had as professionally as I could. I sent out monthly reports with our performance data to anyone with a vague interest.
John Paulson
[On it taking an entire year before Paulson & Co finally landed its first investor] I was like, okay, here comes $10 million! And then it was… $500,000.
John Paulson
[On getting his first $5 million dollar investor] This was a very wealthy guy; he had at least $200 million, and he sent me $5 million. That more than doubled my capital. I was so excited – I was finally at $1 million. He was reading all of these letters and thought that from the way I spoke that I managed more than $100 million. He later told me that if he knew I only managed $5 million, he would never have put in $5 million, since he has a policy against being more than 5 percent of any manager.
John Paulson
We stacked up pretty well, within the top quartile. And being in the top quartile allowed us to steadily raise capital. What distinguished us most was making money in 2001 and 2002 just doing conservative spread deals. We took down our equity exposure and were able to show positive returns when most managers lost money in 2002.
John Paulson
I realized that if I wanted to get into the top leagues, it would have to be by performance.
John Paulson
In 2003, we had our first taste of 40 percent performance, and with very little volatility. That was the magic.
John Paulson
I realized if I was to move up, it would have to be through performance – but performance that could be achieved without taking undue risk. There was no reason to jeopardize this fabulous business we had created and our track record just to grow bigger.
John Paulson
Since we were interested in shorting, we decided to focus on the subprime segment. Although the smallest of the mortgage segments, the market was so large that there was over a trillion dollars of subprime securities outstanding. When we dived deeper into the residential real estate market, the sub-prime market, and the securization market, we began to believe that this area could implode.
John Paulson
The Citigroup trade was very complicated. People were afraid to invest. People that invested early lost a lot of money and they wouldn’t invest any more. The valuation was low. We were correct to assume the government recap plan was the right plan and that would be the last capital they needed. We thought that the valuation of Citigroup was well below what it would have traded at on a normalized earnings multiple, and that it was the most discounted of all the banks. We did the analysis on the banks with the most return potential and Citigroup came out on top.
John Paulson
Of all the investments we made in all the bankruptcies, all the events, all the mergers, etc., the single most important investment I made was switching to the gold share class.
John Paulson
[In 2009] Due to our concerns about he dollar, we started to look for another currency in which to denominate our investments. But in our search, we found other countries, such as the United Kingdom, were also printing money, and we had to separate concerns about the stability and long-term viability of the euro. We thought that, given all the uncertainties regarding paper currencies, gold would be the best currency.
John Paulson
Gold is very volatile in the short term and could as easily go down in the near term as go up. But if you’re invested over a three to five year horizon, I think you’d be much safer in gold as a currency than the dollar.
John Paulson
When the financial crisis started to evolve, the government was a very important player in the restructuring of the financial system, so I really wanted to learn how the system worked. I couldn’t have found a better adviser than Dr. [Alan] Greenspan for that.
John Paulson
No one strategy is correct all the time. We shifted from short credit in 2007, to short equities in 2008, to long credit in 2009 and 2010, to now long restructuring equities. We believe at this point in the economic cycle the greatest gains will come from post-reorganization equities and companies that came close to bankruptcy but were able to raise equity or otherwise restructure capital structure to avoid bankruptcy.
John Paulson
As fear subsides, we believe our positions offer great upside and are poised to outperform.
John Paulson
[In 2011] The dividend yield of the S&P 500 exceeds that of 10-year Treasuries, even though equity dividend yields grow over time while treasury yields are fixed.
John Paulson
[On the stock market in late spring of 2005] This is crazy.
John Paulson
This [market] is like a casino. Is there a bubble we can short?
John Paulson
I had an interest in working and having money in my pocket.
John Paulson
I wasn’t very interested in college.
John Paulson
As much as Leon [Levy] and I liked each other, they needed someone more senior.
John Paulson
[In 1994] I realized I needed to focus…
John Paulson
Some people said they would give me money, but only if they got a piece of my business. It was humbling.
John Paulson
I finished number one in my class.
John Paulson
It was hard to be rejected; it was a lonely period.
John Paulson
I was not a major player. We were a little shell-shocked from the LTCM (Long-Term Capital Management) collapse so we were less aggressive getting back into the market later in the year like others.
John Paulson
Everybody said home prices never had declined on a nationwide basis except during the Great Depression.
John Paulson
This is unbelievable!
John Paulson
As I became more convinced that there had been a massive mispricing of risk, we said, why just sit here with one billion of protection? Why not go for the jugular?
John Paulson
There’s never been an opportunity like this…
John Paulson
The bonds are going to zero…
John Paulson
[In July 2006 on many customers at Option One Mortgage Company (A subprime lending unit of H&R Block) skipping even their first mortgage payments that the company was being forced to take mortgages back from banks to which it had sold them.] It was one of the first signals that something was wrong with the business.
John Paulson
[On his nanny simply not paying her bills but getting dozens of credit cards and store cards and mobile phone accounts.] I can’t believe this. It’s out of control what’s going on.
John Paulson
[On CDO investments in 2010] If you find this confusing, you should. Most people do. Even the people who participated in this market didn’t understand it either.
John Paulson
[In the summer of 2010] We are pretty excited by the opportunities in front of us. If you don’t own a home today, now is the time to buy one.
John Paulson
We have always been forthright in expressing our opinions, and we never misrepresented our positions.
John Paulson
When we expressed our concerns about the mortgage markets, many of the most sophisticated investors in the world, who had analyzed the same publicly available data we had, were fully convinced that we were wrong, and more than willing to bet against us.
John Paulson
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