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Lessons from Lehman: Follow The Fellow Who Saw It Coming?

Tuesday, 1 Sep 2009 | 6:17 PM ET

Billionaire investor John Paulson made his fortune from the Wall Street crisis. Is he’s one step ahead of the curve, again?

A year ago this month, events on Wall Street began unfolding at a rapid pace ultimately leading to one of the saddest moments in business history – the demise of Lehman Brothers.

On September 15th the storied brokerage house that survived the Great Depression imploded in epic fashion as risky bets came home to roost.

Very few saw it coming. But one man did. And he made a fortune betting against it.

We’re talking about John Paulson, the New York hedge fund manager who figured out a way to align his money against the complicated securities linked to an inflating housing market while investment banks such as Lehman were bidding those very same instruments higher.

As Lehamn came tumbling down Paulson took home $3.7 billion, landing him on the Forbes billionaires list.

Now in an ironic twist of fate, we see that Paulson is buying stakes in the Wall Street names that were brought to their knees under the weight of his 2008 winning trade.

He saw it coming once before – is he one step ahead of the curve yet again?

I think he is , says Tim Seymour. And I know he’s also long gold which is a trade I believe in, too.

You might want to also look at Bank of America, adds Pete Najarian, a stock that Paulson holds. Some projections put the stock above $20.


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Trader disclosure: On Sept. 1, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (APPL), (BAC), (F), (SBUX); Seymour's Firm Is Short (FXI), (PBR), (RIMM); Terranova Owns (AMZN), (SU), (WFT); Terranova Is Short (SHLD), (TM); Terranova Owns (GS) Puts; Terranova Owns Dec. Gold Futures; Terranova Works For (VRTS); Najarian Owns (BAC) & Short (BAC) Calls; Najarian Owns (BUCY) & Short (BUCY) Calls; Najarian owns (C) Calls; Najarian Owns (HGSI) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (JPM) & Is Short (JPM) Calls; Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (MSFT) And Is Short (MSFT) Call; Najarian Owns (PALM) Calls; Najarian Owns (TEVA) Calls; Najarian Owns (V) & Short (V) Calls; Najarian Owns (WFc) Put Spread; Najarian Owns (YHOO) Call Spread ; Najarian Owns (MOS) Calls

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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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