Hedge Fund manager John Paulson who has been betting big on gold, is believed to have made $50 million in only 5 weeks from just one gold trade…

Source: read more How John Paulson Made $50 Million…

Man of the Meltdown
How hedge fund manager John Paulson made billions in the crisis
By Spencer E. Ante

Editor’s Rating:
The Good: A fascinating account of how John Paulson profited big time from the housing meltdown.

The Bad: A times the narrative seems a tad scattered and gossipy.

The Bottom Line: A dramatic and plausible account of one man’s triumph.

The Greatest Trade Ever
By Gregory Zuckerman
Broadway; 293 pp.; $26

The Great Recession of 2009 destroyed trillions in wealth. But a few lucky or shrewd souls profited from this catastrophe. Perhaps the single largest beneficiary was John Paulson, a hedge fund manager who engineered the greatest trade in history, earning his firm $20 billion by betting against the housing market. In 2007, Paulson took home a staggering $4 billion for himself, the largest one-year payout in the annals of finance. That’s more than $10 million a day, if you’re counting.

How Paulson and a handful of contrarian investors pulled off this once-in-a-lifetime coup is the subject of The Greatest Trade Ever by Gregory Zuckerman, a senior writer at the The Wall Street Journal. Paulson has released a statement calling the book a disappointment filled with inaccuracies, which he didn’t specify. But The Greatest Trade Ever comes off as a fascinating and believable counter-narrative to the growing pile of books recounting the disastrous mistakes made by many of the supposedly smartest minds on Wall Street. It is also a surprisingly dramatic work—although not always in an enjoyable way. It is the drama of waiting to see the horrific destruction scene in an apocalyptic movie.

Read the rest of my book review here.

John Paulson of Paulson & Co, the legendary hedge fund manager who made tens of billions betting on the mortgage crisis between 2007 to 2009, likes gold.  He really likes it.  He likes gold more than a friend.

To most market participants, this is not news, but here’s something you probably didn’t know:  Paulson owns more gold than several major countries!  Combined!

Here’s how we get that 110 tonne abstract to represent his gold position:

Based on several analyses of his filings, Paulson’s wagering roughly 15% of his $30 billion hedge fund in the precious metal ($4.3 billion).  His investment is spread out between ETFs, physical bullion and shares of gold mining stocks, but for the purpose of this discussion, we’re going to look at them in the aggregate as representational of a bet on gold (which they are).

I am using the “tonne” as my unit of measurement because that is how the World Gold Council measures a nation’s gold reserves.  A tonne is a metric ton, it equals 1000 kilograms.

Assuming Paulson & Co currently owns $4.3 billion worth of gold and using the recent price of $1100 per ounce of gold,  we come up with a total of 3.9 million ounces:

$4,300,000,000 / 1100 oz = 3 909 090.91 ounces

Paulson’s 3.9 million ounces million ounces add up to 110 metric tonnes (35,273 ounces in a tonne):

3.9 million ounces divided by 35,273 oz per tonne = 110 tonnes

As can be seen in the chart above, Paulson holds more gold than many nations with individual populations in the millions and economies in the hundreds of billions.  His reasoning for being so bullish is that there are roughly $200 trillion investable assets (in dollars) in the world, but only $800 billion of that wealth is in gold.

Whether or not the world is truly under-invested in gold is up to you to decide, but Paulson’s bet is a big one by any measure.

Sources:

Reserve Asset Statistics (World Gold Council)

Paulson & Co 13 F Filings (SEC.Gov)

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Hedge fund guru John Paulson is making a big move into gold, launching a new fund that focuses on shares of gold miners and other gold-related shares and gold derivatives, The Wall Street Journal reports.

Paulson’s hedge fund is already a “major holder” of gold shares, including AngloGold Ashanti Ltd. and Kinross Gold, according to the Journal, which, citing the fund’s investors, says that Paulson has more than 10% of his $30 billion or so under management in gold-related investments. At an investor meeting Tuesday, Paulson said the bull run is only beginning for gold, and that he plans to personally invest as much as $250 million in the new gold fund he’s creating, the Journal reports.

Paulson is also very high on Bank of America stock, according to the Journal, which reports that he expects the stock to almost double from its current level by the end of 2011.

Stuff I’m Reading this Morning…

Templeton’s Mark Mobius sees another 40% gain for the BRIC nations.  (Bloomberg)

What Are The Best Hedge Funds Buying?  Including John Paulson, Steve Cohen, Steve Mandel.  (PragCap)

The emperors drop some crumbs: Goldman and Buffett’s plan to help small businesses.  (Barron’s)

10 Most Annoying Things About This Recession.  (TheDisciplinedInvestor)

What’s Icahn up to with MGM?  (DealBook)

The shortest summary of the life of Adam Smith you’ll ever read.  Good stuff.  (EconomistsView)

Brian Moynihan was grilled yesterday in the House, didn’t represent the BAC very well.  (NYP)

$80 oil could mean big trouble to American families.  (Fortune)

Has the legendary Shangri-La just been found?  (NationalGeographic)

This Years Must-Have Toy: The Zhu Zhu Pet

Stuff I’m Reading this Morning…

Gold at a new high overnight, silver screaming, etc.  (WSJ)

Hedge Fund biggies like John Paulson and David Tepper snatching up Citigroup shares.  (DealBook)

Howard Lindzon on which companies are thriving in the New NASDAQ.  (HowardLindzon)

10 Things Your Local News Won’t Tell You.  (SmartMoney)

Ritholtz and Kedrosky: Charting the price of gold…in gold!  LOL.  (InfectiousGreed)

Great entrepreneur story: The founding of True Religion jeans.  (Fortune)

David Kotok:  The investing climate in Vietnam.  (TBP)

Greenbackd is out with their great big monthly list of activist investor situations.  (Greenbackd)

The hottest toy this year are robotic hamsters called Zhu Zhu Pets.  (Bloomberg)

Brazil is Gangsta: TV show host orders executions of criminals for higher ratings.  Sick!  (AMOG)

On Saturday 14 November 2009 Guru Focus reported the short-term investment in Kimco Realty, along with other moves, by hedge funder John Paulson.

John Paulson Buys Citigroup Inc., Varian Inc., Cemex, Sells Centex Corp., State Street Corp., Goldman Sachs

Back in June of this year, when Kimco was just over $10 a share, Paulson bought about 217,000 shares. Although Paulson wouldn’t be getting a taste of Kimco’s 42¢ and 48¢ a share dividends for their Series F & G Preferred issues, Kimco looked to be on the rise.

First quarter net income, reported in May 2009, was in the black at $26.6 million, but still down nearly 70% year-to-year from $86.7 million. By the time of that report, Kimco shares had nearly double in price, to 12.46 from its recent low of 6.97 on 30 March 2009, so an optimistic consensus had been building throughout April.

However, by the end of June, shares had fallen to $10.05 from a high of $12.62 on 4 June and it would have been an uncontroversial conclusion that a new trading zone had been established.

Reported in July, second quarter net had climbed to $43.1 million, still down about 60% year-to-year, but on a rise which was mirrored in share prices, as those began a climb from July’s low of $8.22 on the 17^th to $15.26 on 17 September, the highest it’s been since the end of January of this year.

Since then, Kimco has been trading between $12 and $14, even after a net loss of close to $150 million was reported for the third quarter.

In late September, the REIT raised almost $300 million through a bond offering, intending, in part, to restructure some of its existing debt. It was shortly after that bond issue that Paulson got out of Kimco, somewhere over $13. The well-timed trades by Paulson netted about 30%.

One of the most anticipated books of the global financial meltdown just got a bit of public relations problem. The book, The Greatest Trade Ever, written by Wall Street Journal writer Gregory Zuckerman, due to hit bookshelves tomorrow, details the story of hedge fund operator John Paulson’s now legendary trade against the housing market and how he made billions in the process betting against subprime mortgages.

Although the book is based on extensive interviews with Paulson, Paulson is releasing a statement that disses the book, calling it a disappointment. The statement goes on:

“It contains numerous inaccuracies and fails to capture the essence of the credit bubble. The writing style is indicative of a gossip tabloid rather than respected financial journalism. Unfortunately, the opportunity to create a meaningful documentation of an important time in financial history was lost.”

Now, it is not totally surprising that the subject of a book would be disappointed. That is the nature of biography writing. But Paulson’s criticism seems to run deeper, and is even more surprising given that the book is largely laudatory to Paulson, describing how a “renegade” made financial history.

My main problem is that Paulson does not specify the “numerous inaccuracies.” If he is serious about this criticism, he should detail the instances so the writer has a chance to defend his work. Providing further details would also help readers judge whether the alleged inaccuracies are minor mistakes or major lapses in reporting or judgment.

As for the gossip tabloid style, that claim seems to be a bit overstated. I have already read the first 100 pages of the book, and if that is any indication of the tone of the rest of the story, it’s far from coming off like a tabloid, though there are a few parts where Zuckerman seems to throw in some unnecessary details about the personal problems of some characters to spice up the tale. For example, Zuckerman devotes a substantial amount of space chronicling the marital problems of one analyst who worked for Paulson, which didn’t add much to the story.

It will be interesting to see how the publisher and the author react to Paulson’s statement. They can’t be entirely happy about it.

THE GURU OUTLOOK 

Courtesy of The Pragmatic Capitalist

We’re starting a regular new feature at TPC in which we’ll summarize some of the most recent macro and micro outlooks from so-called investment gurus.  This week’s edition will start with two investors who have handled the crisis (and recovery) remarkably well:  John Paulson and Marc Faber. Both have similar macro outlooks:

John Paulson: Paulson made waves in 2008 with his billion dollar gains from the sub-prime crisis.  The master wave rider was short all the way down and then reversed his bearish course in stunning fashion as he went long the very same things he made so much money betting against.  In late February he referred to the market as the “buying opportunity of a lifetime”.   Paulson’s reflation trade is turning out to be another home run.   Paulson clearly believes in the Fed’s ability to reflate us out of this mess.  In the last 6 months he has made massive bets on gold and gold related equities.  In addition, Paulson has put his money on the opposite side of the trade he made a killing in last year – he now owns massive stakes in several large banks including Bank of America as well as the toxic Capital One Financial.   Paulson is even putting together money for a “real estate recovery” fund.

His latest 13-F shows an interesting mix of financials, gold and healthcare related names.  The hedging behind this allocation is quite brilliant.  He owns massive stakes in defensive healthcare names, large stakes in the full blown recovery names (banks) and the gold positions will serve as a hedge against inflation and/or the doomsday scenario.  Paulson, clearly believes inflation is likely to occur in the coming years as his bets on hard assets and real estate show.

Marc Faber: Faber has been remarkably prescient over the course of the last few years.  He was very bearish throughout all of 2008 and turned bullish on March 9th of 2009 – the day the market bottomed.  He even said the market was due for a 6 month rally.

He has a very similar outlook to Paulson (though his long-term outlook remains somewhat different).   Faber is very bullish on hard assets and emerging market equities.  He believes the Federal Reserve is in the process of causing horrible inflation and even refers to Ben Bernanke as a “criminal”.   Faber is bullish on gold, gold stocks and foreign equities (primarily emerging market equities) in the long-term and remains bearish on paper assets such as the dollar and bonds in the long-term.  Faber does maintain that the dollar is oversold in the very near-term and that the Euro is overbought.  He also believes stocks may be near their peak for 2009.

Faber is particularly bullish on Thailand and Singapore where he sees continued value.  In Thailand he likes the following companies: Tipco Food, Samui Airport Property Fund, Thai Tap Water and in Singapore he likes Design Studio Furniture.   In terms of hard asset related equities Faber likes Newmont Mining, Novagold and Sprott Resources.

In the long-term Faber believes the Fed is simply reflating the bubble that helped cause this mess to begin with.  He believes it will result in a total unraveling of the capitalist system.

After profiting hugely from shorting financial stocks last year as the sector tanked, hedge fund guru John Paulson has been buying up beaten-down financials this summer.

Paulson has bought a stake of about 2% in Citigroup, the New York Post reports, citing sources. “One source said that Paulson sees Citi’s shares trading closer to its book value of $5 to $7 a share, and that he has been scooping up shares in the bank over the past several weeks,” the Post stated, adding that a Paulson spokesperson declined to comment.

Earlier this month, The Wall Street Journal reported that Paulson bought 168 million shares of Bank of America in the second quarter, as well as 14.9 million shares of Capital One Financial Corp., 35 million shares of Regions Financial Corp., and smaller stakes in Fifth Third Bancorp and Goldman Sachs Group. He also made large investments in mining companies that deal with gold and in gold exchange-traded funds, the Journal reported, noting that Paulson had previously said he was bullish on gold.

Stuff I’m Reading this Morning…

William Ackman may finally be done bashing his pretty head against the brick wall that is Target.  (Dealbreaker)

Ezra Klein on what Whole Foods can teach us about healthcare.  (WaPo)

Bespoke breaks down hedge fund star John Paulson’s most recent sector allocations.  (BIG)

And then Trader Mark discusses Paulson’s just-revealed big position in Bank of America and his gold holdings.  (FundMyMutualFund)

CNBC had Nassim Taleb and Nouriel Roubini (aka Gloom & Doom) on at the same time…and the world didn’t explode, so that’s good.  (Clusterstock)

Pequot’s Art Samberg’s got some ’splainin’ to do!  (USA Today)

10 Most High Profile Internet Failures of All Time.  (Minyanville)

I love when Tadas does his own stuff…Abnormal Returns on the Technical v Fundamental debate and why so many rich people are value investors.  (AR)

Yes, we’re all embarrassed for what Rolling Stone has become (Justin Timberlake/ Barack Obama Quarterly) but still, they’ve picked some rising stars correctly (RS)

Several strategists who produced big returns during the downturn, including George Soros and John Paulson, are seeing tough times ahead for the economy — but opportunities in the market right now.

According to The Wall Street Journal, Soros is bullish on stocks in Brazil, China, and India. Corporate profits will likely not be as high as they were during the “super bubble”, but China will partially replace the struggling U.S. consumer, he says. “China is the major beneficiary of the collapse of the financial system,” Soros says. “For them it was an external shock. Because China is in a position to stimulate its economy, it will be a motor for the global economy.”

Soros, whose hedge fund gained 32% in 2007, 8% last year, and is up 17% this year, says we are in a trading market, and investors should take profits when shares jump, the Journal reports.

Paulson, meanwhile, is betting on some of the types of assets he successfully bet against over the past few years, believing that prices were factoring in numerous defaults that were unlikely to occur, the Journal reports. “We completely shifted our focus on the credit markets from one which had a short bias starting in 2006 to one that is aggressively long,” said Paulson, who in recent months has bought top-rated residential mortgage-backed bonds, commercial mortgage-backed securities, distressed debt, leveraged loans, and even some big bank and financial stocks like Capital One Financial Corp. and J.P. Morgan Chase & Co., the Journal says. He’s also high on commercial real estate broker CB Richard Ellis Group Inc. and Petro-Canada.

Paulson also sees slower growth and major inflation in the future, however, and has about 10% of his holdings in gold, the Journal says.

Another hedge fund strategist who saw the housing crisis coming, Alan Fournier, is high on health care stocks like WellPoint Inc., saying their earnings won’t be as impacted by the Obama Administration’s health care plans as many think. He’s also high on coal and utility stocks. Fournier sees trouble down the line for the economy, however: “It’s only a matter of time before stimulus effects fade, the economy rolls over, deficits hurt bond yields and the dollar gets hurt.”

China Investment Corp. is poised to invest $500 million in a Blackstone Group hedge-fund unit as part of a broad effort to put cash to work while global markets are rallying but remain below earlier peaks.

A hefty injection from China would be welcome news for hedge funds, eager to raise fresh capital after brutal markets and an exodus of investors hurt the industry. It also would offer another sign that some big money is stepping off the sidelines as markets stabilize world-wide.

Companies and investors are watching to see if sovereign-wealth funds will once again channel significant money into new deals, after several were burned by high-profile U.S. investments during the financial crisis. Though Middle East funds have ratcheted up spending lately, some remain hobbled by woes at home.

EyePress News/Newscom

STEPPING UP: Lou Jiwei of China Investment Corp. sees opportunity.

CIC is considering opening its checkbook to a handful of hedge funds, a move that comes as CIC Chairman Lou Jiwei is concerned his fund may miss opportunities near the bottom of the market, according to people who work closely with the Chinese fund. That is a reversal in attitude from December, when Mr. Lou said he didn’t have “the courage” to invest in the developed world’s financial institutions because “we don’t know what trouble they are in.”

A spokeswoman for CIC and a spokesman for Blackstone declined to comment.

Set up in 2007 and capitalized by Beijing, CIC is one of the world’s largest sovereign-wealth funds, controlling some $200 billion. The fund already knows Blackstone well, and has suffered some from the relationship. CIC invested $3 billion for a nearly 10% stake in Blackstone just before it went public in 2007, an investment that brought it ridicule in China when the private-equity firm’s shares fell. Since Blackstone’s IPO two years ago this coming Monday, Blackstone shares have dropped about 64%, leaving CIC with a loss of about $1.9 billion.

Still, CIC managers later struck a deal with Blackstone allowing the fund to increase its stake to 12.5%, signaling confidence in the firm’s prospects. And committing capital to Blackstone’s hedge-fund unit is a bet more on its expertise than its stock.

That Blackstone division has about $26 billion in investments doled out to hedge funds on behalf of Blackstone clients. One of the world’s largest so-called fund-of-fund managers, Blackstone commands access to some of the biggest funds.

It isn’t clear how much CIC might allocate to hedge funds. In the past, CIC officials have said they plan to farm out up to $80 billion to asset managers, with private-equity firms and hedge funds likely to get a chunk of that capital.

Prominent hedge funds have been talking to CIC for months. Eric Mindich of Eton Park Capital Management and John Paulson of Paulson & Co. are among hedge-fund bosses who have met with CIC representatives, among other Asian investors, in recent months, according to people familiar with the matter. Wall Street insiders see those hedge funds as on a relatively short list of managers more likely than peers to get CIC money, though such decisions could take months.

Investment staffers at the Chinese fund also have sought the hedge-fund managers’ view of the credit crisis and global markets in general.

Last year, James Simons, head of big hedge-fund firm Renaissance Technologies, talked with CIC about selling a stake in Renaissance but didn’t do a deal, people familiar with the matter said.

Spokesmen for the hedge funds declined to comment.

The China fund’s plans don’t necessarily mark a trend toward more global investments by sovereign-wealth funds. Temasek Holdings Pte. Ltd., Singapore’s state-owned investment firm, this year has moved to focus more on Asia investments, selling off stakes in foreign banks at big losses.

In the Middle East, there has been continued deal activity. In March, Abu Dhabi investors snapped up a 9.1% stake in Daimler AG. And earlier this month, the government-backed investment company of Qatar said it is considering a deal to invest in Porsche Automobil Holding SE. The buying comes as the region’s fortunes have started to turn around, thanks in large measure to climbing oil prices.

But some big Mideast players remain reined in. Kuwait, hobbled by political infighting and a banking crisis, withdrew from a planned joint venture with Dow Chemical Co. late last year, blaming the global financial crisis. And Dubai, another U.A.E. emirate, is still reeling from its property-market bust and lately has refrained from big international deal-making.

CIC has been ramping up activity. CIC in late 2007 put $5.6 billion in Morgan Stanley convertible securities whose value later plunged. But earlier this month, CIC plowed an additional $1.2 billion into Morgan Stanley. On Tuesday, CIC struck its first known property deal, agreeing to commit 200 million Australian dollars (US$158.9 million) to a financing facility for Goodman Group, Australia’s largest industrial-property trust.

Elsewhere, CIC put $3.2 billion toward a $4 billion fund managed by J.C. Flowers & Co. to hunt for opportunities among financial institutions.

From WSJA

Jean Viry-Babel
senior partner
VBK partners

By Ambrose Evans-Pritchard
The Telegraph, London
Saturday, May 23, 2009

The world’s top hedge fund manager, John Paulson, has built a gold position of at least $5.5billion, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993.

Britain has become the first of the Anglo-Saxon “AAA” club to face a downgrade. As feared, the cancer of bank leverage is spreading to sovereign cores.

Gold prices tend to slide in late May and languish through the summer, because of the seasonal ups and downs of jewellery demand. The trader reflex would be to short gold at this stage after its $90 vault to $959 an ounce over the past month. They may think again this year.

Paulson & Co. has bought $2.9 billion in SPDR Gold Trust, the biggest of the gold exchange-traded funds (ETFs), which now holds 1,106 tonnes — three times the Brown-gutted reserves of the United Kingdom.

Mr Paulson has also built up a $2.3 billion holding of Anglo Ashanti, Goldfields, Kinross Gold, and Market Vectors Gold Miners. The fact that he is launching a “Paulson Real Estate Recovery Fund,” reversing the bet against sub-prime securities that made him rich, tells us all we need to know about his thinking. This is a liquidity-reflation play.

He may be wrong, of course. In his early 50s, he belongs to the baby-boom cohort most psychologically vulnerable to the 1970s “paradigm error.” And perhaps he has never lived in Japan.

It is striking how many of those most alert to the deflation danger are either veterans of Japan’s Lost Decade or close students of it: Albert Edwards at Societe Generale, Russell Jones at RBC Capital, Nobel laureate Paul Krugman, the Fed’s Ben Bernanke, and Athanasios Orphanides, who helped draft the Fed’s study on the Japan trap.

“People always thought Japan’s bond yields had to rise, but they kept falling and Japan is still not really out of deflation,” said Mr. Edwards. Indeed, 20 years after the Nikkei peaked at over 39,000 it stands today at 9,280. Interest rates are 0.01 percent. The yield on two-year state bonds is 0.34 percent. Still there is not a whiff of inflation.

A number of readers have written to me in tones of polite reproach asking why I fret about deflation when governments everywhere are spending and printing as if there was no tomorrow. I admit to being tortured by self-doubt, like others grappling with this extraordinary situation.

What we know is that inflation is already negative in Ireland (-3.5 percent), China (-1.5 percent), Thailand (-0.9 percent), Korea (-0.5 percent), U.S. (-0.7), Japan (-0.3), Switzerland (-0.3), Spain (-0.2). The eurozone may be negative by July. Alistair Darling said Britain’s retail RPI inflation used to set wage deals will be minus 3 percent by September.

Does this constitute deflation in a meaningful sense? Not yet, perhaps. But it is moving too close for comfort in a world stretched by extreme leverage. The economies of the U.S., Japan, the eurozone, and Britain have been contracting in “nominal” as well as “real” terms — which smacks of the 1930s.

The “yen GDP” of Japan has shrunk by 10 percent in one year; the “euro GDP” of Germany has shrunk 6.2 percent, and Italy’s by 4.7 percent; the “dollar GDP” of the U.S. has shrunk 3.3 percent. Debts are not shrinking, however.

GMO’s Jeremy Grantham says in his latest note, “Last Hurrah And Seven Lean Years,” that the market value of equities, houses, and commercial property in the US reached $50 trillion in the boom. This “perceived wealth” sustained $25 trillion of debt.

The crash has cut this wealth to $30 trillion, but the debts are still there. America’s debt-gearing has exploded, as it has in the U.K. and Europe. This looks awfully like Irving Fisher’s “debt deflation” trap of 1933. It will be a long slog for households to bring their debt-to-wealth ratios down to manageable levels.

You can argue — as do UBS, Merrill Lynch, ING, and Capital Economics, to name a few — that massive global stimulus is merely struggling to offset a massive deflationary shock.

So how will gold fare in a “Japanese” stalemate world where neither inflation nor deflation gets the upper hand? The eight-year rally that has lifted gold from $254 to $959 may lose momentum for a while.

“The air is getting thin up here,” said John Reade, precious metals guru at UBS. “Rich investors are no longer rushing out to buy gold bars as they did after the Lehman collapse. Still, we think it is highly significant that both China and Russia — two of the biggest holders of foreign reserves — are both buying gold,” he said.

Personally, I remain a gold bug out of fear that the most corrosive phase of this crisis lies ahead. There are two more boils to lance: Europe and China. As the International Monetary Fund keeps telling us, Europe’s banks are still covering up their vast toxic debts. Nor has the G20 begun to address the root cause of the global crisis, which lies in excess exports from East (aided by currency manipulation) to an overspending West. China is putting off the day of reckoning with its crisis response, which is to build yet more plant to flood the world with yet more overcapacity.

For “political bears” the risk is that the EU polity fragments under strain and that governments restrict basic markets to defend themselves — whether by imposing exchange controls to stop bond flight, or shutting derivatives markets used as hedges, or putting up trade barriers. We will find out if and when unemployment hits 10 percent in America, 12 percent in Germany, and 20 percent in Spain, or if migrant workers rampage in Shenzhen.

Some call this the “Armageddon case” for gold. That is going too far. However, gold has outperformed Wall Street’s S&P 500 index by 500 percent so far this century, as if able sniff out trouble in advance. Such runs tend to finish with a “parabolic” blow-off before they die. Mr Paulson may yet make another fortune, whatever his reason.

Warren Buffett

Previous: William Gates III

Next: Carlos Slim Helu & family

AP Photo/Matt Sayles

Net Worth:$37.0 bil
Fortune:self made 
Source:Berkshire Hathaway 
Age:78 
Country Of Citizenship:United States 
Residence:Omaha, Nebraska 
Industry:Investments 
Education:University of Nebraska Lincoln, Bachelor of Arts / Science, Columbia University, Master of Science 
Marital Status:widowed, remarried, 3 children 

Last year America’s most beloved investor was the world’s richest man. This year he has to settle for second place after losing $25 billion in 12 months. Shares of Berkshire Hathaway down 45% since last March. Injected billions of dollars into Goldman Sachs, GE in exchange for preferred stock last fall; propped up insurance firm Swiss Re in February with $2.6 billion infusion. Admits he made some “dumb” investment mistakes in 2008. Upbeat about America’s future: “Our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so.” Scoffs at Wall Street’s over-reliance on “history-based” models: “If merely looking up past financial data would tell you what the future holds, the Forbes 400 would consist of librarians.” Son of Nebraska politician delivered newspapers as a boy. Filed first tax return at age 13, claiming $35 deduction for bicycle. Studied under value investing guru Benjamin Graham at Columbia. Took over textile firm Berkshire Hathaway 1965. Today holding company invested in insurance (Geico, General Re), jewelry (Borsheim’s), utilities (MidAmerican Energy), food (Dairy Queen, See’s Candies). Also has noncontrolling stakes in Anheuser-Busch, Coca-Cola, Wells Fargo.

Even Angelina Jolie reveres Warren Buffet’s big big brains