Are Paulson's $32 Billion Funds Too-Big?

According to Bloognerg, Paulson spent $2 billion buying credit-default swaps on subprime mortgages before the housing market collapsed, a trade that soared when home loans went bad in record numbers.

Bloomberg mentioned that While New York-based JPMorgan and Bridgewater of Westport, Connecticut, are larger than Paulson’s firm, they tend to make comparatively smaller bets. Therefore, John Paulson tends to make comparatively bigger bets?

Here is the list of top five hedge funds:

   1. JPMorgan Chase & Co.      $44 billion 
   2. Bridgewater Associates    $43.6 billion
   3. Paulson & Co.             $32 billion
   4. Soros Fund Management     $27 billion
   5. Brevan Howard Asset Management         $27 billion
   

By all means, Soros and Paulson are the famous people. JP Morgan Chase is also a bank. It is interesting that it carries two roles, the bank and the hedge fund.

Hedge fund generally has bad reputation, that is a statement way too mild.

Forbs Magazine had an article last fall titled "How Dirty Are Hedge Funds?". Here are some excerpts:

"How dirty is the hedge fund business? Filthy would be a fair assessment."

"21% of hedge funds lie about past legal and regulatory problems and 28% propagate incorrect or unverifiable information about other topics."

The hedge funds' "concern is in making sure that any crooked dealings aren't captured on tape."

Isn't that cool? The hedge fund investors must have believed that. It is believed that in order to qualify for hedge fund investment, the investor need to have at least $1 million. This really does not apply to most of the Americans, maybe 95% of the Americans? Let's switch topic to something different. In the year of 2010, California is looking for a new governor, and unlikely a new senator too. Running for a US senator costs around $3 milloins, we can believe that it will be more expensive in California. Running for California's governor is said to cost $150 millions. If we put two and two together, do we get four? Someone has got money, someone else needs money to run for office that might have donors with names in mind more than the voters without names. Not really. Just that money buys many things, those of the rest of us can only sit here watching.

The list should go on and on. The ultimate conclusion is that we are connected to them even if they do not care about us other than opening up our wallets.

Everyone is an investor or related to an investor. If we work, we may have 401k, IRAs or company stock options. If we do not work, our livelihood may depend on the generosity of other people who are investors.

We eat, drink, go to the bathroom and transport. Our actions, no matter how basic they are, affect companies' stock values. So anyone of us is connected to the people in Hollywood, the representatives of the rich people.

We love them too! That's why we buy newspapers and magazines to read their stories, that's why we search them Internet which enriched Yahhoo and Google to make money off our clicking the search buttons!

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