When one is an investor in a hedge fund, letters from the top that include lines about being “disappointed,” “clearly wrong in our judgment,” and this year being notable for being “the worst in the firm’s history” are tough to take. Sure, they’re slightly more palatable than those that attempt to explain why the last month/quarter/year went ass-bleedingly bad by deflecting the blame with something like, “We lost it all but you can take solace in knowing it’s not us, it’s the market. The global financial markets are wrong, and we happy few at [insert firm here] are correct, in a way that has yet to reveal itself but rest assured, is coming” and/or offer a silver-lining à la,“Now hear the great news: we’ve turned every dollar you invested in the beginning of the year into 15 cents,” but whether you get a “sorry” or “sorry, we’re not sorry” letter doesn’t really much matter. In both cases, a whole bunch of your money is gone. Generally speaking. If you’re speaking of hedge fund Paulson and Co, however, such is not the case! According to the Times, the fact that the firm has suffered its worst performance since inception is actually of little matter to investors, as John Paulson has “guaranteed” he will be covering their losses, whatever they may be, come year-end. For the purposes of not getting anyone’s hopes up, it should be noted that the guarantee only applies to one investor. Everyone else, past performance yadda yadda still applies to you- better luck next year. Continue reading »