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George Soros is a Hungarian-American billionaire investor and philanthropist.
As of February 2018, he had a net worth of $8 billion, having donated more than $32 billion to his philanthropic agency, the Open Society Foundations.
He is known as “The Man Who Broke the Bank of England” because of his short sale of US$10 billion worth of pounds sterling, which made him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis.
His hedge fund (Quantum Fund) started with $12 million AUM, and as of 2011 it had $25 billion, the majority of Soros’s overall net worth.
In this post, I will share all the best trading tips and quotes from George Soros, so that we can learn from his knowledge and experience.
Here are some of the best trading tips and quotes by George Soros:
- If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.
- I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.
- My approach works not by making valid predictions but by allowing me to correct false ones.
- I very often used to get backaches due to the fact that I was wrong. Whenever you are wrong you have to fight or [take] flight. When [I] make the decision, the backache goes away.
- It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.
- The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.
- Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected.
- The worse a situation becomes, the less it takes to turn it around, and the bigger the upside.
- Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes.
- Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
- When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold. I called gold the ultimate bubble, which means it may go higher. But it’s certainly not safe and it’s not going to last forever.
- If I had to sum up my practical skills, I would use one word: survival. And operating a hedge fund utilized my training in survival to the fullest.
- Whenever there is a conflict between universal principles and self-interest, self-interest is likely to prevail.
- The hardest thing to judge is what level of risk is safe.
- Unfortunately, the more complex the system, the greater the room for error.
- The generally accepted view is that markets are always right — that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite view. I believe the market prices are always wrong in the sense that they present a biased view of the future.
- Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization. Taking this view, it is possible to see financial markets as a laboratory for testing hypotheses, albeit not strictly scientific ones. The truth is, successful investing is a kind of alchemy.
- I would be lying, however, if I claimed that I could always formulate worthwhile hypotheses on the basis of my theoretical framework. Sometimes there were no reflexive processes to be found; sometimes I failed to find them; and, what was the most painful of all, sometimes I got them wrong. One way or another, I often invested without a worthwhile hypothesis and my activities were not very different from a random walk.
- Money values do not simply mirror the state of affairs in the real world; valuation is a positive act that makes an impact on the course of events. Monetary and real phenomena are connected in a reflexive fashion; that is, they influence each other mutually. The reflexive relationship manifests itself most clearly in the use and abuse of credit.
- The only thing that could hurt me is if my success encouraged me to return to my childhood fantasies of omnipotence — but that is not likely to happen as long as I remain engaged in the financial markets, because they constantly remind me of my limitations.
- When you sell options, you get paid for assuming risk. That can be a profitable business, but it does not mix well with the risks inherent in a leveraged portfolio.
- The trouble with institutional investors is that their performance is usually measured relative to their peer group and not by an absolute yardstick. This makes them trend followers by definition.
- We [at Soros Fund Management] use options and more exotic derivatives sparingly. We try to catch new trends early and in later stages we try to catch trend reversals. Therefore, we tend to stabilize rather than destabilize the market. We are not doing this as a public service. It is our style of making money.
- Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.
- I contend that financial markets never reflect the underlying reality accurately; they always distort it in some way or another and the distortions find expression in market prices. Those distortions can, occasionally, find ways to affect the fundamentals that market prices are supposed to reflect.
Now that I have shared the best trading tips and quotes from George Soros, which is your favourite trading tip?
Let me know in the comments below.
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Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.