Hedge fund managers don’t know macro

Listen I know John Paulson made an enormous amount of money betting against the housing markets in 2007. He made some excellent calls and made a tonne of cash.

As Nassim Taleb would say though, that doesn’t necessarily mean he has skill or insight. He could just have been lucky. Most people lost money in that market; it would be almost impossible if nobody had the opposite positions and made large amounts of money.

I’m also not saying Paulson doesn’t have skills or insight.

But I am saying that there is no reason to listen to hedge fund managers as a guide to the economy.

Paulson’s hedge funds are in total down significantly this year.  He got it right and now he got it wrong.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.