John Paulson lost 11 percent in his biggest fund in June, according to an investor, as the firm sold off Sino-Forest Corp. after a short-seller’s allegations. The drop left Paulson’s Advantage Plus Fund, which uses strategies designed to profit from corporate events such as takeovers and bankruptcies, down 18 percent this year, said the client, who asked not to be named because the information is private. Julie Hyman reports on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)
It is important to recognize that even some of the greatest investors have made huge mistakes. In 2008, many of the big value managers got killed by buying some of the big banks like Citigroup and Bank of America. If not for a bailout from the Treasury and the Federal Reserve, these companies would have gone bankrupt. In addition, short term performance means little. Tom Russo was down 2% in 1999, when the market was up 19%; and he said it was the greatest year of his investment career. He went on to post spectacular returns in the following years as the tech bubble burst, and has produced per annum returns of close to 16% for 1984.