Where the big boys bet

February 22nd, 2010

How do you invest your money?

Even though they are now elderly, the big successes in the world of investments are like rock stars. They get great press. They’re solicited for interviews. Every appearance on television gets broadcast again and again. Their books sell like hotcakes and they star in the gossip columns. The attention is good for business: At the drop of a hat, they can raise billions for the investment funds they run. People track the billionaires for one simple reason – they want tips. They want to know what to buy.

Buffet and Soros

Warren Buffet and George Soros are the world’s greatest investors. Anybody who reads what they write or say, tries to figure out what they’re up to, what they’re buying and selling, and whether they should be emulated. Tracking the investment stars even makes sense from a consumerist point of view: You can invest like them without paying exorbitant management fees, 2% to 3% of your assets a year plus 20% of profits if you invest through a fund.  It’s not easy to do like they do. First of all, they don’t want you to know what they’re doing. If they choose to release information, it’s usually after they made their move. Now they’d be perfectly happy for the general public to follow their steps and increase the value of their investment.

Are you into Hedge Funds?

Hedge funds seek to hedge some of the risks inherent in their investments using a variety of methods, most notably short selling and derivatives. However, the term “hedge fund” has also come to be applied to certain funds that do not hedge their investments, and in particular to funds using short selling and other “hedging” methods to increase rather than reduce risk, with the expectation of increasing the return on their investment.

The hedge fund legend

Hedge fund legend John Paulson was the uncontested star of investments in 2008 and 2009. He made billions for Paulson & Co., and for himself, betting against the subprime mortgages market. His coup was described in the bestseller “The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.” If there were an Oscar for investment managers, he’d take best fund manager and best player.

Now

Today Paulson is betting on banks and gold. He gorged on Bank of America stock ($2.3 billion), Citigroup and JPMorgan, and is buying gold through mining stocks like Anglo Gold and through ETFs tracking the metal. He also has shares in Boston Scientific, Sun and the energy company XTO.

Soros

George Soros’ funds remain among the most successful in the world. What was he up to in December? His fund was diving into gold, even though last month he said that, all told, gold is the biggest bubble in the world. Anyway, he has also bet heavily on oil, through shares in Brazilian giant Petrobras and Hess Corp. What else? Citigroup.

This entry was posted on Monday, February 22nd, 2010 at 9:02 am and is filed under Economy, Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Click here to cancel reply.

Name (required)

Mail (will not be published) (required)

Website