Bears Turning Into Bulls

You may recall the investigation ofGoldman Sachs a month or so ago, involving a hedge fund trader who helped Goldman assemble a basket of poorly performing mortgages. Goldman sold the mortgages to its unsuspecting clients, the hedge fund manager took a short position, betting against the declining mortgages, and everybody won. Everybody except the clients, that is.

That hedge fund manager, John Paulson, is back in the news, because his fund recently released details of its latest purchases. And the news is that he's now on the recovery side of the housing market, buying a stake in Atlanta-based homebuilder Beazer Homes. One report said Paulson told his clients that he expects home prices rising by 3 to 5 percent this year, and 8 to 12 percent next year.

That's not to say Paulson has any special insight into the housing market, just because he made one successful bet on its demise a few years ago. But it's highly unlikely that this move accompanies any of the sort of under-the-table deals like the Goldman Sachs affair. And it takes a lot for people to change their stripes, so when a famous housing bear becomes a bull, it's worth paying attention to.