John Paulson Tells the Story of Wall Street's 'Greatest Trade'

The transcript discusses a highly profitable trade in the mortgage market around 2007, which generated approximately $20 billion. The speaker explains their confidence in the trade due to the overvaluation of mortgage market segments and the lack of historical defaults on investment-grade mortgage-backed securities. The idea originated from a specialty in shorting credit, facilitated by the liquidity in the mortgage-backed securities market and the development of credit default swaps. The trade's success led to significant recognition and growth in assets under management. The speaker also touches on the substantial tax payments made as a result of the profits.

What was the reported profit from the trade in the mortgage market around 2007?

• $10 billion

• $20 billion

• $30 billion

• $40 billion

Why were mortgage-backed securities considered safe before the 2007 trade?

• They were insured by private companies.

• There had never been a default of investment-grade securities.

• They were backed by the government.

• They had high interest rates.

What was a key factor that allowed the trader to short credit in the mortgage-backed securities market?

• High interest rates

• Unlimited liquidity

• Government backing

• Low competition

How did the trader's life change after the successful trade?

• He became less known.

• He faced financial losses.

• He met interesting people and gained recognition.

• He retired from trading.

What was the fund's performance in February 2007?

• Up 100% net

• Up 66% net

• Up 80% gross

• Up 6.6% net

What was the total asset growth of the fund over two years?

• From $6 billion to $35 billion

• From $6 billion to $50 billion

• From $6 billion to $20 billion

• From $6 billion to $10 billion

What was the reported tax payment to the IRS?

• Over $1 billion

• Over $3 billion

• Over $500 million

• Over $2 billion