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Book Review: The Greatest Trade Ever

I have the privilege  to read the book The Greatest Trade Ever. Thanks to bro who lent this to me.

The Greatest Trade Ever is a book by Gregory Zuckerman writing the behind the scenes look at how John Paulson, and a group of minor investors for saw the subprime and the subsequent crisis and made 15 billion in a single year for his hedge fund and himself.

this book ain’t the book you want to read if you want to learn how to pick stocks or how to analyze charts.

However, credit really to Gregory for writing it in such a simple to understand manner.

It is an easy read and from there, as a noobie you really can see from their experience what goes on behind those big money making trades. You would only see that they made alot of money but not the stories that people don’t hear about:

1. It takes convictions to make all these big trades. All of them based their trades on the idea that the housing market is a house of cards. But people and information is throwing them all sorts of signals that really you find it easier now that it has happen already, but for them, it was a heck of a ride. Any of them could have gotten off anytime and missed this one
2. You learn that you can be right that housing markets is a house of cards. but if you are too early into it, you just get killed when the market goes up instead of down.
3. You learn that all the insiders or all the so-called experts will keep telling you that they are the pro and their view of things will beat you because of it. Do you belittle yourself and think that they are right?
4. When the folks are throwing you all kind of signals, how do you go about justifying that your views of the direction of things?
5. You learn that you can be right, and your fund performs well, but because your bank is down 70%,  you are not gonna get much bonus (your big payout) even though you work so hard for it.
6. Understand the story of how devoted some analyst can be to their job, and in the search for truth how anxious they can get.
7. You learn the story of Micheal Burry, self taught value investor who is able to make money based on simple premises and clear analysis.
8. You also learn about the workings of a hedge fund, and if you get into a short position and you spend 2 years waiting, your investors will kill you this time, before you even see your results vindicated.
9. You learn that when your position is in the money, the psychology of things is to take money off the table instead of adding to it to locking in gains!

All in all, this book doesn’t gives you an answer, but asks yourself the questions that most likely you will need to make that is similar to these folks. Definitely recommended

Related posts:

1. What is my most influential personal finance book to date?
2. Trading Log:Straits Asia Trade Review
3. Book Value and Intrinsic Value
4. George Soros Interview for his new book: The New Paradigm for Financial Markets
5. John Paulson’s Hedge fund made 20 billion from disaster. 8 tips how you can do that next time.

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