George Soros - Famous Trader Profile
October 06, 2005
Market Wizards Index: +34%
Compound annual over 19 years
Fund or affiliation: Quantum Group of Funds (1969 to present)
MethodologyMultidirectional global speculation in commodities, currencies, stocks and bonds using massive amount of leverage.
Research Techniques Employed
Opinions are generated by reading newspapers. He never reads Wall Street researches - KEEP IT SIMPLE.
As long as he knows something better than others, he has an edge. He does not need to know everything.
Trading Techniques Employed
Start with a small position, then build it up if it works.
Defines first the level of risk he dares assume.
As John Train described in 1987, Soros uses:
a team for risk arbitrage;
a team for options arbitrage;
a man on macroeconomic analysis;
a team for U.S. investments;
a team for European investments;
one in-house short seller;
a few semi-independent managers for short selling,
each one of them runs a mini-account. Soros himself would sit at the back and monitor the trades. He would personally increase the volume of any particular trade that looks good to him.
Philosophy and beliefs
Reflexivity
The more people believes in efficient market theory, the less efficient will the market becomes.
TA does not work.
Fundamental analysis determines the fundamental value of a security. But a security’s fundamental value is also changed by its stock price. (Reflexivity)
History and other facts
Jim Rogers and Victor Niederhoffer once worked with Soros.
Soros farmed out tranches since 1981.
Soros joined Arnold S. Bleichroeder in 1963, where he met Rogers.
Examples
1987 dumped $1B worth of S&P futures at 20% discount.
1969 went long REIT.
1974 went short REIT.
1973/ 74 shorted institutional favorites like Disney, Polaroid, Avon and Tropicana.
Performance Record- 34.5% over 19 years: "$10,000 invested... in 1969 was worth over $2.8M in 1988".
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