Updated from 8:41 a.m. EDT

John Paulson made so many smart bets in 2007, one of the most-difficult years for this market that we've seen in some time, that he made $1.7 billion for himself for the year. No hedge fund was more successful in 2007 than Paulson's, which was up a whopping 435% for the year. Halfway through 2008, Paulson & Co. is striking again, up 26%, vs. -15% for the

S&P 500


Formed by John Paulson of Queens, N.Y., ironically a former

Bear Stearns

banker, the fund bet that the subprime market would collapse in 2007 and throughout 2008. Paulson & Co.'s primary method was to buy credit default swaps, commonly known as CDS's, on various financial institutions and indexes.

With credit easily available and the housing market still enacted, credit default swaps on money center banks and homebuilders were trading for almost nothing. By all accounts, Paulson was risking 3% to 5% of his entire portfolio by buying these credit default swaps, with the possibility of making 10 times to 40 times his entire portfolio if things got really nasty.

With the housing market all but collapsed and most financial companies fighting to stay alive, Paulson & Company raked in $20 billion in profits in 2007, netting its manager $3.5 billion in personal income in 2007 propelling him to No. 165 on the


400 list of the wealthiest Americans.

Paulson & Company also has substantial equity positions, all of which we actively track on Stockpickr. Its portfolio includes




Boston Scientific

(BSX) - Get Report


To read the rest of the story and find out what super investor Paulson is buying this year, please click here.

A note from James Altucher:Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to atheme but also offer significant analysis as to why the stocks are cheap.Here are some examples: Here's the challenge: Build a portfolio at Stockpickr.com with greatanalysis, and send me the link. Each great portfolio (with analysis)will get posted on TheStreet.com with your byline (as a "StockpickrGuest Columnist") and will be included in my email I send to Jim and the otherhedge fund managers on my list.

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