New Mexico state pension fund sticks with John Paulson as the ‘99 percent’ march outside his house
The New Mexico pension fund will continue to invest in billionaire hedge fund manager John Paulson for now, the fund’s chief investment officer said Wednesday. Paulson gained national attention when he bet against the sub-prime bubble, but his firm is now experiencing huge losses. Reuters reports:
[Paulson] told investors on a call that he had been wrong on the timing of a recovery and had overconfidently bet that too many stock prices would rise, according to several people who listened in.
His main Advantage Plus fund has tumbled 47 percent this year while his Advantage fund cousin is off 32 percent, investors have said.
Paulson said that he might be forced to return as much as one-quarter of the firm’s roughly $30 billion, the investors who listened to the call said.
Much of Paulson’s losses are due to the fact that he listened to former Federal Reserve chair Alan Greenspan’s advice that the Fed’s policy of quantitative easing would spur significant inflation, according to the Financial Times. In 2009, Paulson he allowed his investors to transfer their holdings into gold, which some consider to be safe insurance against the dollar losing its value.
Since the initial policy of quantitative easing, inflation expectations have mostly been quite low, and investors like Paulson who bet on a quicker recovery have suffered losses.
Paulson’s Manhattan townhouse was the focus of some members of the “99 percent” movement this week during a “Millionaire’s March” that targeted some of the wealthiest denizens of the Upper East Side. Protesters waved a replica of a $5 billion check from “the 99 percent” outside of Paulson’s door, and left it there after no one answered, reports Gothamist.
The Occupy Wall Street protests were originally organized by groups opposed to recent efforts by state governments to cut or privatize parts of the safety net, including the pensions of public-sector workers, even while property taxes on the wealthy are cut or capped.