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Net Net: Promoting innovation and managing change

Is John Paulson's Super Bullish Call On Housing Insane?

The billionaires are feeling bullish.

John Alfred Paulson, president of Paulson & Co., Inc.
TimSloan | AFP | Getty Images

Several billionaires among us have taken publicly announced aggressive bullish outlooks. There’s David Tepper, of course, who proposed that stocks are in for a “win-win” scenario: going up if the economy recovers or, if the recovery doesn’t come about, going up when the Fed intervenes with a second round of quantitative easing.

But perhaps no billionaire—or even many of us regular folks—has sounded as bullish a bellow as John Paulson.

Speaking to a standing room only crowd at the University Club in midtown Manhattan, Paulson reportedly said: “If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

Paulson’s claim to fame is to have engaged in “the greatest trade ever”—massively shorting the housing market. (Incidentally, we think Tepper’s trade of going massively long the US bailout of financial institutions may have immediately supplanted Paulson’s trade for that particular superlative.) Thanks to that trade he’s now one of the E. F. Hutton’s of the market: when Paulson speaks, people listen.

We’re listening. So what is it that Paulson’s telling us?