John Paulson: From the greatest trade ever to a string of losses

The hedge fund manager became an overnight sensation in 2007 by betting big and early on the collapse of the US housing market, and then doing much of the same on a surge in gold prices.

But he is now emerging as one of this year's big losers in the $2-trillion US hedge fund industry.

His Paulson & Co. hedge-fund firm, which managed $38 billion as recently as this past March, is down to about $35 billion as of the first week of August, and it shrinks a little bit more with every big drop in the US stock market.

One of Paulson's two main funds is now down more than 30 percent this year, the firm has reported to clients, compared to a much smaller 6.1 percent decline for the average hedge fund, according to Hedge Fund Research.

The problem for the 55-year-old manager: His equally daring bet that the US economy and housing market would rebound strongly from the financial crisis - a big wager that looked prescient a year ago - isn't panning out as planned.

Text: Matthew Goldstein, Jennifer Ablan and Svea Herbst-Bayliss, Reuters

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