The 2008 crash ruined millions.
Banks begged for bailouts. Families lost everything.
But one man?
He didn’t panic. He didn’t lose.
He bet against the system—and made $4 BILLION off its collapse.
This is his strategy:🧵
John Paulson’s story isn’t your typical Wall Street tale.
He studied business at NYU, then started in consulting.
But he quickly realized something:
Why advise others on making money when he could make it himself?
That mindset shift changed everything.
So, he joined an investment bank, gaining crucial experience in finance.
By 1994, he took the ultimate risk—
He started his own hedge fund: Paulson & Co. Inc.
But there was a big problem:
No one wanted to invest in him.
For a full year, he struggled to find his first client.
With little capital and no outside support, he had a choice:
Give up or bet on himself.
He chose the latter.
Paulson started his fund with $2 million of his own money and built it from scratch.
The early years were rough.
Big hedge funds were pulling in $100M+ annually.
Paulson? His firm only managed $16M in the 90s.
By 2005, things weren’t better—his fund returned 5%, while competitors averaged 9%.
He needed a breakthrough.
That breakthrough came in 2007—but not in the way you’d expect.
At the time, the U.S. housing market was on fire.
Banks were handing out loans to risky borrowers, convinced that home prices would never fall.
Investors blindly followed the trend.
Paulson did the opposite.
He dug into the data and saw something shocking:
The entire mortgage system was built on a lie.
Loans were being given to people who couldn’t repay them.
The market wasn’t booming—it was a bubble waiting to pop.
And when it did, it would take everything down.
Most investors ignored the warning signs.
Paulson acted.
He used Credit Default Swaps (CDS)—a financial tool that let him bet against mortgage-backed securities.
If the housing market crashed, these CDS would pay out massive profits.
It was a bold, risky bet.
