John Paulson made billions betting against subprime mortgages. Now, he says buying a house is the best possible investment.
If you already own a home, buy a second one. "You won't make returns that good by investing in me," Paulson told the audience at CNBC's Delivering Alpha conference in Manhattan on Wednesday.
Paulson said that back in 2006, he was aware that housing was at its peak. Now, he thinks it's still very close to the bottom.
"I think we're just at the beginning of the recovery. I think it will continue for four to seven years," he said. "It's not too late to get involved."
For the individual investor, locking in a fixed-mortgage rate is also a way to hedge against inflation down the road. He thinks it's unlikely that an uptick in mortgage rates will cause the housing market to cool.
Paulson's hedge fund, Paulson & Co., has been betting big on housing for more than a year. He says his fund has likely been the largest purchaser of undeveloped land in Arizona, California, Florida and Nevada this year. He expects the price of such land to increase precipitously, since he thinks there's not enough inventory to meet the coming demand for new homes.
The 57-year old billionaire has a knack for finding returns in the housing market, but his bets on gold haven't worked out very well recently. Paulson's gold fund has lost 65% this year as the price of gold has dropped roughly 25%.
Still, Paulson thinks gold is a winning bet over the long term. He is certain that inflation will eventually be an issue, and gold is the ultimate hedge. "The rationale for owning gold has not gone away," he said. "The consequences of printing money over time will be inflation. It's difficult to predict when."
For those who think Paulson might be a one-hit housing wonder, there's still time to measure his investing prowess over the long haul: Paulson said he's just started the second 20-year chapter of his wealth-management career. At 77, he thinks he may be ready to retire.
As the housing market heats up, so is competition among home improvement retailers.
A day after Home Depot (HD) delivered earnings and revenue that were much better than forecasts and raised its guidance, Lowe's (LOW) reported a weaker-than-expected quarterly profit for the first-quarter on declining sales.
Lowe's CEO Robert Niblock blamed "cooler than normal temperatures and greater precipitation" for the soft sales figures. In contrast, Home Depot CEO Frank Blake said his company continued to MOREHibah Yousuf - May 22, 2013 1:14 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
If the housing market is really on the mend, that is undeniably a good sign for the broader economy and the stock market.
Guess what? It's increasingly looking like the housing rebound is, to pull a MOREPaul R. La Monica - May 21, 2013 1:06 PM ET
By Lee Munson
There is a feeling out there by some in the financial media that small-time investors are getting back into the stock market at the worst possible time. They -- or 'them' -- think this is entirely predictable and repeatable mistake.
I get it: "them" are smart and 'you people' only make mistakes.
Let's look at what's really going on.
First things first: Who said this is the worst possible time to MOREJan 29, 2013 12:46 PM ET
Bank stocks have been on a tear in 2012. Monday was no different, as shares of big banks pushed the broader market higher.
Bank of America (BAC), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all climbed more than 2%, while Wells Fargo (WFC) rallied more than 3%. AIG (AIG) shares were up after the company said it plans to sell its stake in AIA Group, a Hong Kong-based life insurance MOREHibah Yousuf - Dec 17, 2012 12:59 PM ET
JPMorgan (JPM) CEO Jamie Dimon says the U.S. economy is poised to boom if Washington lawmakers can strike a deal to avoid the fiscal cliff.
But of course, that's a really big "if."
"I don't know the odds," said Dimon, speaking at a conference Wednesday hosted by The New York Times' Dealbook. "We could go off the fiscal cliff, and it may not be as big of a deal as people MOREHibah Yousuf - Dec 12, 2012 10:19 AM ET
Lowe's (LOW) impressed investors with third quarter results Monday that showed the home improvement retailer is following its own slogan to "never stop improving."
Third quarter profits jumped 76% from a year ago. Investors, in turn, pushed the stock up nearly 7% Monday. That had some traders on StockTwits excited.
elliottrexler: $LOW. Is an increase in same store sales oversees an indication of what's to come? #Lowes Beats estimates
Still it's unclear MOREMaureen Farrell - Nov 19, 2012 12:35 PM ET
The housing market has hit bottom. Problem is, investors already know that.
Two honebuilders reported decent, albeit not spectacular, results Monday morning. D.R. Horton (DHI) posted a profit that beat forecasts. But revenues missed estimates. Meanwhile, Beazer Homes (BZH) reported revenue that exceeded expectations. But its quarterly loss was higher than what analysts were predicting.
Both stocks fell on the news. Beazer got hit particularly hard though, plunging nearly 14% compared to MOREPaul R. La Monica - Nov 12, 2012 11:49 AM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
The U.S. economy has been slogging along at a sluggish pace for several years. I've been referring to the post-Great Recession period as the barbecue recovery since 2010. It's been low and slow.
But even conspiracy theorists MOREPaul R. La Monica - Oct 17, 2012 12:41 PM ET
Wells Fargo posted a record profit of $4.9 billion for the third quarter as mortgage lending picked up, but weaker-than-expected revenue left investors disappointed.
The nation's largest mortgage lender said it originated $139 billion of mortgages during the third quarter, up 6% from a year earlier, as record low interest rates drove homeowners to refinance. But the low rates also weighed on the interest income that Wells Fargo earns on its loans and MOREHibah Yousuf - Oct 12, 2012 5:40 PM ET
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