Billionaire investor. Philanthropist. Political
His legendaryinvesting acumen, vastnet worth and political
activism have made George Soros a feared and respected
Soros is driven by aninvestment philosophy built upon the
scientific method combined with a focus on societal change. His
reputation sends shivers of fear through the central banks with
weakened currencies and disagreeable governmental policies. His
political stances aside, this mentor tohedge fund legends like
Jim Rogers and Victor Niederhoffer canoffer critical lessons for
George Soros' Biography
Born in 1930 in Hungary, Soros survived the Nazi occupation of
his homeland. After fleeing communist-dominated Hungary in 1947,
he attended the London School ofEconomics graduating in 1952. It
was here where he began studying Karl Popper's "TheOpen Society
and its Enemies," a critique of totalitarian societies and an
examination of the scientific method. These two ideas became the
guiding light for the rest of his life.
||George Soros' legendary investing acumen, vast net
worth and political activism have made him a feared and
respected power broker worldwide.
Making his way to New York in 1956, Soros accepted a job
atWall Street firm F.M. Mayer. After gaining experience at
several financial firms, he launched his own hedge fund in 1973.
First named the SorosFund , the Quantum Fund had incredible
success over the years. The success was so great that in 2012,
Soros made the list as the 22nd-wealthiest person alive, with an
estimated fortune of $20 billion.
Another way to picture Soros' investing success: If you had
invested $1,000 with him in 1969, you would have earned a
cumulative annual return of 30%, or about $4 million by 2000.
Talk about powerful investing returns!
It is this financial success from trading and investing that
funded Soros' foray into philanthropy. Launching the Open Society
Institute in 1984 with the goal "to advance justice, education,
public health, business development and independent media" on a
global scale, Soros has given $8 billion via his institute
tosupport human rights, freedom of expression and access to
public health and education in 70 nations. No shrinking violet,
he has written 12 books and remains chairman of the Quantum
George Soros' Investment Strategy And Big Wins
Soros' primaryfinancial market philosophy is something he calls
reflexivity. Reflexivity is a set of ideas that seeks to explain
how a feedback mechanism can skew howmarket participants value
assets in that market. He uses this framework as a means to
predict financial bubbles, among other economic changes.
Soros also applies the scientific method to his financial
trading strategy. This means that his first step in deciding what
to trade is to develop a thesis about what he believeswill
happen, based on the available market-provided evidence.
Secondly, he tests the thesis in the real market studying the
results. If the position goes against him, he gets out. If it
goes his way, thus confirming the original thesis, he adds to the
Most interestingly, when testing his investing thesis, Soros
says he relies on bodily hints and intuition for clues. For
instance, he has said that if he gets a backache after entering a
trade, he takes it as a sign to close the position.
(On a personalnote , my friend Dr. Flavia Cymbalista, an
expert in uncertainty, was summoned by Soros to help him in
quantifying these bodily and intuitive investing clues. In my
opinion, this is fascinating research.)
Soros' largest win earned him a reputation as "the man who
broke the Bank of England." He made more than $1 billion by
betting that the British pound would have to be devalued due to
the negative impact British high interest rates were having
onasset prices. In addition, Soros simultaneously purchased
based on the idea thatstock prices would increase aftercurrency
George Soros' Portfolio: What's He Holding Now?
As you might imagine, Soros Fund Management holds a
well-diversified stock portfolio. According to GuruFocus.com, his
top-performing U.S. holding in thisyear 's first quarter was
ShutterFly (Nasdaq: SFLY)
, a personalized digital photo service. The company has amarket
cap of nearly $2 billion, and Soros was up nearly 30% in the
first quarter. However, he took profits by selling 510,000shares
, reducing his holdings to 2.5 million shares.
Soros' next top-performing U.S. holding is
Pioneer Natural Resources (
, a nearly $20 billion market cap independent oil and gas
explorer. His holdings were up nearly 18% in the first quarter.
Along with thegains , Soros added over 234,000 shares in the
first quarter, bringing his total position in the company to over
2 million shares.
Action to Take -->
There are many investing lessons to be learned by studying George
Soros. The key takeaways are:
1. Follow a strong inner belief system when making investing
2. Apply the scientific method of testing investment ideas
prior to committing all yourcapital .
3. Don't discount intuition and bodily clues that you may feel
when making investment decisions.
Recently, Soros has soured on gold. He slashed his exposure to
SPDR Gold TrustETF (
by 55% in last year's fourth quarter and another 11.5% in this
year's first quarter. However, in an apparent paradox, Soros
increased his stake in gold mining companies in the first
quarter. He more than doubled his stake in the
Market Vectors Gold Miners ETF (
, to nearly 3 million shares.
According to CNBC, Soros told the South China Morning
"When the euro was close to collapsing in the last year,
actually gold went down because if people needed to sell
something, they could sell gold. Therefore they sold gold. So
gold went down together with everything else. Gold was destroyed
as a safe haven, proved to be unsafe. Because of the
disappointment, most people are reducing their holdings of
Soros' move proved prescient with gold dropping steeply after
he reduced his exposure to GLD.
Those who wish follow Soros'bearish lead on gold's potential
further decline may consider
ProShares Ultra ShortGold ETF (
PowerShares DB Gold Short ETN (
, as these instruments are designed to produce profits as the
sinks. However, exercise caution when investing in inverse ETF's,
as the built-inleverage can be dangerous.