What you’re not hearing about George Soros today
by Joshua Brown, The Reformed Broker
August 2006 – a reporter for the Financial Times walks into a former Presbyterian church-turned-dining club with George Soros. The place is deserted, save for the pair and some staffers who will serve them a quiet lunch. The reporter asks the famed investor about the infamous day in 1992 when he “broke the British pound” with his bet against the UK’s government and its currency. Soros can’t recall which day it was, despite the fact that his masterpiece trade netted him a billion-dollar profit.
“Was it a Wednesday? A Thursday?”
It was Wednesday. They still call it “Black Wednesday” to this day.
George Soros, according to people in the know, is apparently shorting global and US stocks and loading up on gold right now. Gregory Zuckerman has the whole story over at the Wall Street Journal but the money shot is…
After a long hiatus, George Soros has returned to trading, lured by opportunities to profit from what he sees as coming economic troubles.
Worried about the outlook for the global economy and concerned that large market shifts may be at hand, the billionaire hedge-fund founder and philanthropist recently directed a series of big, bearish investments, according to people close to the matter.
Soros Fund Management LLC, which manages $30 billion for Mr. Soros and his family, sold stocks and bought gold and shares of gold miners, anticipating weakness in various markets.
Josh here – basically, he’s worried about all of the same issues everyone else is: China’s economy and the political mismanagement of it, #BREXIT, the migration crisis, the rise of right-wing separatist movements throughout Europe (and here, LOL), etc. All worthy things to be concerned with for a rational person, of course.
Soros is said to have bought a lot of Barrick Gold and Silver Wheaton and adopted derivative positions that will benefit from a decline in the S&P 500. Many people, myself included, regard Soros as perhaps the greatest living trader. If he’s not the G.O.A.T., it would be hard to say who else might be.
Soros has a reputation for prescience at key market turning points, and, as such, the media is going absolutely fucking bonkers with this story. It’s clickable as hell, why wouldn’t they run with it?
Which is fine.
But I think it’s worth mentioning some things about Soros that are not being said to investors being urged to panic, follow his lead or otherwise rend their garments in distress.
So I’ll do it.
Here’s the first thing: Soros doesn’t need to be right. I’ll go ahead and make the assumption the he really wants to be right, but it’s not going to break him or anything he cares about if the market goes in a different direction than his instinct tells him it will. Soros runs a family office – essentially managing his own enormous fortune and the wealth of his employees. There is no OPM involved.
What this means is that he can, at a whim, change his mind, change the directional leaning of his trades and even completely rework his portfolio to bet the other way. This is hard to do when one is answering to outside investors or LPs. Actually, it’s probably no longer possible for 99% of fund managers in the modern age. Consultants need the narrative sold to them so they can pass it on to their clients. Schizophrenia works for people operating at Soros’s level, but it doesn’t sell well.