Truly great?

by gbsmith4

This article caught my eye this morning:

Rivals Scout Paulson Assets

Two things: I don’t know the complete history of John Paulson’s trading, and you should also never trash another trader.   That said, his success seemed to hinge on 2 great trades: short mortgage-backed securities and long gold.  Is that enough to deem him “guru?”

My take is that too often “guru” or “genius” is bestowed based on one or two trades…that are unrepeatable.  Or, the person had the right strategy in the right market (i.e. they were long during a bull market), but is stumped when the market turns.

The latter is particularly treacherous as a person can claim “they outperformed the market” for a long stretch, even though their entire strategy consisted of being 2x long during a bull market.  Again, if they’re truly great, they can also make money (or at least stay flat) during a bear market.  In other words show me a trader who was consistently profitable from say, 1998 to 2008, and I’ll then show you a real guru.

Everyone else is who is “great” is either a trend follower who was “right place, right time” or had a few, non-repeatable, homeruns.