George Soros: Can You Invest Like Him?

By | January 20, 2014

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

George Soros

George Soros

Words of a man who broke the Bank of England in 1992! George Soros is much more than a top-notch investor. He is a Philanthropist, Billionaire investor, political influence, and a sign of worry for banks with weak currencies. George Soros is a powerful broker unlike Warrant Buffet and has a unique style of investing.

Brief Biography: George Soros was born in 1930 in Hungary and graduated from the London School of Economics in 1952. After working with several investment firms of the Wall Street, George Soros started his first hedge fund in 1973, SorosFund (Quantum Fund). In 2012, he was considered the 22nd richest man to be alive with a net worth of nearly $20 billion. He has written over 12 books and has given away more than $8 billion through his Open Society Institute (1984).

What is the investment strategy of George Soros?

Soros has always been transparent about his investment strategy. His investment strategy is often called as reflexivity. Soros invest his money according to the societal change combined with scientific formulas. In simple terms, reflexivity is all about noticing every single movement of the market and creates a feedback mechanism, which can predict the evaluation approach used by investors under given market conditions.

Soros is also known for his financial trading strategy where he uses his scientific method for investing. Before making any investment, he rather believes in studying the market and associated evidences to predict the mood of the market. He further confirms his thesis with a test run in the market and invests according to the results.

Soros got the title with his biggest investment bet in 1992, “the man who broke the Bank of England.” George Soros made over a $1 billion on a single day in 1992 (Black Wednesday) during the currency crisis in England. His anticipation came correct when the British authorities broke away from the European Exchange Rate Mechanism (ERM). He made a bet over the devaluation of pound, which devalued over 20 percent helping Soros make $1 billion in a single day.

Key Investment Insights of George Soros

Short-term Speculations: The most distinctive feature of George Soros’s investment strategy is his short-term speculations and he prefers changing his positions in every few months. His strategy is altogether different from that of Warrant Buffet who believes in holding investments for several decades. Further, his strategy to test new waters has served him well throughout his investment career. Soros once quoted that,

“I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

Big currency bets: Soros has always been interested in currency trading including the famous 1992 pound bet that broke the Bank of England. Another of his famous investments includes his bet on Baht (Currency of Thailand) during the Asian Financial Crisis in 1997. However, not every of his bet had been successful and George Soros had some big losses during his investing career.

In 1998, Soros lost $2 billion after investing in the Russian debt crisis. In addition to that, the tech bubble in 1999 cost him $700 million. The crash in stock market in 2008-2009 left him with a loss of $3 billion. So, it has not been a fairy tale with George Soros and it is important to be thoughtful before following all his investment moves.

Top 5 latest holdings of George Soros

  1. Microsoft (MSFT)
  2. FedEx Corporation (FDX)
  3. Teva Pharmaceuticals Industries Ltd. (TEVA)
  4. Halliburton Company (HAL)
  5. YPF Sociedad Anonima (YPF)

 

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