January 22, 2019

The World’s Biggest Traders Series – George Soros

The World’s Biggest Traders Series - George Soros

George Soros is a world-renowned Hungarian-American stock investor, currency speculator, businessman, social activist and philanthropist. He is also one of the wealthiest living individuals in the world.

With his net worth currently estimated at $24 billion, Soros can exert a tremendous amount of political influence. He is also able to sway both stock and currency markets due to his signature style of making large investments in certain markets at specific times.

Early Life and Career

Soros was born in Hungary and grew up in a country ruled by a Nazi socialist government. He would later flee from his native country to enrol at the London School of Economics. At the same time, he took on jobs as a waiter and railway porter.

He got his first start in finance by working at a merchant bank but left in 1969 to launch his first hedge fund called Double Eagle. Soros used the profit earned from the fund to launch his second fund, Soros Hedge Management.

At this point, he changed the name of the Double Eagle Fund to the Quantum Fund. This new company would become the principal advisor to his business ventures moving forward.

At its launch, the Quantum Fund only had $12 million worth of assets under its management. However, due to Soros’ sharp investment mind, the company successfully grew to manage more than $25 billion worth of assets by 2011, which represented a significant percentage of his individual net worth.

From the time he launched his fund and into the 80s, he had already made a name for himself as an astute trader, but his big break was still to come.

The Man Who Broke the Bank of England

Mr. Soros cemented his reputation as an almost mythical investment figure in September 1992, during a period where the British government decided to devalue the British pound sterling. Through the Quantum Group, Soros sold billions of pounds sterling in the period just before the devaluation, much of which he had bought with borrowed money.

Following the devaluation, he bought back massive sums of pounds and managed to repay all the money he had borrowed initially, earning a profit of close to $1 billion.

Although there are many others who profited from shorting the pound during this time, the scale of his trades simply dwarfed those of everyone else. This move resulted in a new nickname for Soros “the man who broke the Bank of England.”

Controversy

Soros has had controversial dealings in the money markets as well. Although he has continually denied being involved in the 1997 attacks by speculators on the Thai baht, his name continued to be linked to the financial crunch that swept across Asia the following year.

In fact, Malaysia’s Prime Minister, Mahathir bin Mohamad, was one of the figures that accused Soros of interfering with the ringgit’s value. What few people knew at the time was that the crisis had actually cost him billions of dollars.

Meanwhile, in 2002, a French court found Soros guilty of being involved in insider trading in a 1988 stock deal, which involved Société Générale, a financial services company. The court fined him €2.2 million.

The Soros Trading Philosophy

George Soros has gained fame as a short-term, speculative trader who makes huge and highly-leveraged wagers on the direction that the financial markets will likely move.

His hedge fund is known for engaging in global macro trading strategies, whose philosophy is centred on making large, one-way bets on the price action of currency exchange rates, stocks, commodity prices, bonds or derivative investments on the basis of macroeconomic analysis.

Soros’ actions may appear to be based on instinct – which is partly true – but his investments are also often executed according to extensive market research and analysis. He has referred to his trading philosophy as reflexivity. No matter what his secret is, Soros clearly knows what he is doing when it comes to the investment world!