Stocks enjoyed a highly successful September, but returns for the S&P 500 couldn’t match those of John Paulson’s largest investment fund, which raked in a 12.5 percent gain for the month, according to The Wall Street Journal.
Paulson’s September comeback is something of a vindication for a bullish stance the hedge fund manager took earlier this year. The investor, who gained prominence for shorting the mortgage market ahead of the housing crisis, is now advocating that investors buy houses and gold ahead of a coming wave of asset-price inflation.
August was a rough month for Paulson. According to reports, his $9 billion Advantage Plus fund lost 4.3 percent during that month, and for the first eight months of the year, the fund had lost 11 percent. That slump appears to have reversed; today’s Journal report says that all of Paulson Co.’s hedge funds are registering year-to-date gains.
Paulson’s success could accompany a broader outflow of money from traditionally safe bets like U.S. Treasury securities into equities, as yields on long-term bonds remain at extreme lows. If that trend gains traction, we may be poised for a year-end stock-market rally.