Former Banker

I have just spent the better part of the last 24 hours totally engrossed in “The Greatest Trade Ever“. To be honest, I picked it up expecting a blow-by-blow of how this guy (John Paulson) went about making billions for himself by anticipating the collapse of the subprime market and aggressively betting against it. As a former banker (and as someone who is intent on achieving financial independence), I love those kinds of stories.

I was not disappointed. The story grabs you from the get-go and never really lets go of you, although you know (from the title) how it’s going to end. This is no small feat.

There is no shortage of technical jargon, especially when referring to the various financial products (one more imaginative than the other) that caused the collapse. Yet I felt like the author tried his best to make the whole story make sense even if you only had a very rudimentary grasp of financial markets. You don’t really need to know all the details, as long as you can understand that “if this happens, X makes money, if that happens, Y makes money”.

All the major players in the story have entire sections devoted to their backgrounds, sometimes going as far as their great-grandfathers. It helps you understand their taste for (or aversion to) risk, their lifestyle choices, and their motives. Some might feel like this is not necessary, while others will welcome the opportunity of getting to know the characters in detail.

The book itself is not so much a “how he did it”; it’s more of a “the so-called professionals were so oblivious that a relative outsider was able to swoop in and school them at their own game”. When you read the book, you realize that it’s not about a guy who outsmarted his peers and made a fortune in the process. It’s about a man who had very little experience in real estate, basically stumbled upon fundamental flaws in the market, yet made the most of that discovery to become a billionaire.

This isn’t meant to take ANYTHING away from what John Paulson achieved, but upon reading the book, you will realize that the tools he needed to make his coup happen were literally handed to him by the financial industry itself!

The book ends with insights on other bubbles waiting to burst, as John Paulson reveals his next target. And I can’t help but remember this quote:

Progress, far from consisting in change, depends on retentiveness. Those who cannot remember the past are condemned to repeat it. – George Santayana

“The Greatest Trade Ever” is available on Amazon as a Kindle E-Book, paperback, hardcover, and audiobook.