A Major Lesson from Last Year

I used to think multi-billionaire hedge fund managers were a lot smarter than me. I used to think that, because of their past success and their inside connections, whatever investment strategy they were executing was better than mine.

Boy, was I wrong.

Exhibit A in this is, of course, John Paulson. His passionate bullishness for Bank of America and financial stocks in general made me really wonder how off-base I was in early 2011. After all, he's John Paulson, and I'm a nobody. Well, we see how well that worked out. His Advantage Plus fund was down something like 50% or more last year. So much for green shoots.

The same is true for Eddie Lampert. A number of years ago he made a very public and aggressive acquisition of Sears and Kmart. One part of me knew that, let's face it, Sears and Kmart suck. They might have been big deals half a century ago, but today, they're just pathetic dumps. But, again, who am I to challenge what someone like a Lampert says? Take a look at SHLD and you can see just how brilliant the guy is.

The bottom line is that we're every bit as good as these guys, and often better. The downfall of John Paulson just goes to show what happens when someone is so widely perceived as infallible. And, lest you think I'm cherry-picking, you can examine Barron's from a year ago and their usual gang of idiot "experts" (like permabull AJC) and consider how well their oh-so-professional progsnostications panned out.