Who Is George Soros
George Soros is a famous hedge fund manager who is widely considered to be one of the most successful investors of all time. Soros managed the Quantum Fund, a fund that achieved an average annual return of 30% from 1970 to 2000. Besides his investing prowess, the Hungarian born Soros is also known for his vast philanthropic activities and has donated billions of dollars to various causes through the Soros Foundation. Thought to have retired from investing, The Wall Street Journal announced that Soros was once again trading in 2016 through his family office Soros Fund Management LLC.
Breaking Down George Soros
George Soros is most famous for his single-day gain of $1 billion on September 16, 1992, which he made by short selling the British pound. At the time, England was part of the European Exchange Rate Mechanism, a fixed exchange-rate system that included other European countries. The other countries were pressuring England to devalue its currency in relation to the other countries in the system or to leave the system. England resisted the devaluation, but with continued pressure from the fixed system and speculators in the currency market, England floated its currency and the value of the pound suffered. By leveraging the value of his fund, Soros was able to take a $10 billion short position on the pound, which earned him $1 billion. This trade is considered one of the greatest trades of all time, and Soros is often credited as the man who broke the Bank of England.
Recently, Soros has been very vocal about the future of the European Union. Following the Brexit vote of 2016 and the refugee crisis that has brought millions of people into European countries from war-torn areas of the middle east, Soros has warned of the "existential crisis", facing Europe. He has set forth a plan to rescue Europe from a pending crisis by tackling the refugee crisis, territorial break-ups like Brexit, and the austerity crisis that has plagued countries like Italy and Spain.
George Soros' Investment Style
George Soros is unique among highly successful investors in that he allows instinct to play a large role in his investment decisions. Soros is famously well informed about economic trends on a regional and global level and he uses this knowledge to exploit market inefficiencies with large, highly leveraged bets. Soros has both the capital and the risk tolerance to ride out these bets longer than many other hedge funds. In fact, Soros has cowed a number of national governments on currency issues with his perseverance and deep pockets. During the Asian Financial Crisis, Soros added to his growing list of monikers and became the man who broke the Bank of Thailand.
Despite Soros' deep knowledge of global markets and excellent sources of information, the decision to close out a bet is reportedly more a gut call than any market signal. One popular theory is that Soros has internalized so much of the market and its workings that he instinctively knows when the time has come to close out for a profit long before he can rationalize the decision. Whether that is true or not, whatever Soros is doing has made him a fortune that few investors in the world — basically anyone without the last name Buffett — can match. (For related reading, see "How George Soros Got Rich")