Paulson’s Rules | MartinKronicle - Michael Martin
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Paulson’s Rules

Paulson’s investing lessons:

1. Don’t Rely on Experts
2. Bubble Trouble
3. Focus on Debt Markets
4. Master New investments
5. Insurance Pays
6. Experience Counts
7. Don’t Fall In Love
8. Luck Helps

I like #7….

You cannot fall in love with a trade when you’re making money. You have to have a certain level of mistrust. Why? Because you never know why you’re making money in the first place. You may be lucky, you may be right in your fundamental analysis. You might be up for reasons you haven’t even considered.

Put your protective stop order in and enjoy the ride. And make sure you come out having made money – don’t let an otherwise winning trade become a loser or a break-even trade.

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  • M

    Paulson essentially bet it all on one trade and won. Great trade, but statistically not a sustainable strategy over the long run. Like stocks, the crowd could “buy and hold” his strategy and hope it works a majority of the time.

  • M

    Paulson essentially bet it all on one trade and won. Great trade, but statistically not a sustainable strategy over the long run. Like stocks, the crowd could “buy and hold” his strategy and hope it works a majority of the time.

  • Michael

    Thanks for commenting. There is no data that says for sure he bet the ranch. My guess is he had large position and was handsomely rewarded due to the catastrophic collapse. If you have to post 5% margin, and you see a 90% move in the underlying, you’ll make many times your money.

  • Michael

    Thanks for commenting. There is no data that says for sure he bet the ranch. My guess is he had large position and was handsomely rewarded due to the catastrophic collapse. If you have to post 5% margin, and you see a 90% move in the underlying, you’ll make many times your money.