In a live interview Zuckerman tells us that Paulson feels the bears are missing an extremely important fact – P/E levels are extraordinarily attractive. Here's the Paulson quote:
"Price-earnings ratios are at historic lows. This has created many buying opportunities where companies are trading at extremely low valuations irrespective of strong performance."
Also, Paulson thinks investors have too little faith in the buoyancy of the US economy and he expects things to improve over the next year or so.
So where’s he putting his money?
According to Zuckerman, Paulson likes banks and thinks the balance sheets of many U.S. banks are strong, making them good long-term bets, no matter what happens in Europe. In the sector, long positions held by Paulson include BofA and Citi , Zuckerman, says.
And as for other plays on the economy, Paulson is long Hewlett Packard and gaming companies.
"Despite the sharp losses, don't count him out too early," says Zuckerman.
* In case you're wondering, John Paulson is perhaps best known for shorting housing ahead of the real estate bubble.
Greg Zuckerman is author of The Greatest Trade Ever: The Behind The Scenes Story Of How John Paulson Defied Wall Street And Made Financial History.
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Trader disclosure: On Sep 19, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Nathan is long Apple (AAPL) through call spreads; Nathan is long Goldman Sachs (GS) through call spreads; Nathan is long Intel (INTC) through put spreads; Nathan is JPMorgan (JPM) through put spreads; Nathan is long Oracle (ORCL) through put spreads; Nathan is Sprint (S); Nathan is long DIA puts; Nathan is XLF puts; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU; Finerman and Finerman’s firm own (AAPL); Finerman owns (BAC) and Finerman’s firm own (BAC) leaps; Finerman owns (JPM) and Finerman’s firm owns (JPM) stock and (JPM) leaps; Finerman’s firm owns (IBM); Finerman owns (GOOG); Finerman owns (ORCL); Finerman’s firm owns (MSFT); Finerman owns IWM; Finerman owns MDY; Finerman owns SPY; Terranova is long VRTS; Terranova is long OXY; Terranova is long HOS; Terranova is long OIH; Terranova is long CVI; Terranova is long AXP; Terranova is long EMC; Terranova is long WFM; Terranova is long AMZN; Terranova is long WFC; Terranova is long AAPL; Terranova is long IBM
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