Soros made most of his money in 'short' positions

Summary: 

1. Soros makes most of his money through 'short positions'. Soros initially made $1 billion shorting pound in 1995, then 5 years later shorting Thai Bhat, and then shorting Japanese Yen in 2012-13. This confirms my observation that in trading there are more 'significant one-off' opportunities in short positions.

2. But these short opportunities come only at specific times. You cannot be ahead of time. 

3. Soros made most of his money in 'currencies' 

4. Soros lost $1 bn as a result of stock rally post Donald Trump's election (So, he was short the market/stocks leading to the US election). This shows even with so much experience as Soros, it is still possible to lose money. Yet, a loss of $1 billion is a meagre 3% of his networth of about $30 billion

5. Soros is now 86 years old. So, Soros made his big bet on pound in 1991 when i.e. when he was 61 years old. Investing is an experienced man's game!

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Also, see the WSJ article below, Santley Drukenmiller made the opposite bet and made money post Trump election. 

Note the timing of Stanley Drukenmiller. He square off his bearish positions on the night of elections. 

- He squared off his long-gold bet on the night of elections. Shows, how effective he was in squaring off his position. As immediately after trump's election, gold prices fell by about 15% or so. (Shows, how even the best and brightest play till the last moment. He should have squared off a little earlier. Yet, the very fact he squared off the position shows that he's only looking at the broad picture and not the $1, $2, $5 or $10 or $50 dollars. He squared off based on the broad trend. Even when he purchased he purchased at about $1050 per ounnce. I don't think he waited for $1000 round number. Shows how the big guys play in the market. They are looking at broad trends, not the prices till the last decimals.)

- He went short on bonds (on all global bonds) post or just before trump's elections. Shows another very good macro move. Again, he's concentrating the broad picture. Not the nitty gritty. 


http://www.wsj.com/articles/billionaire-george-soros-lost-nearly-1-billion-in-weeks-after-trump-election-1484227167

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Regulator Accidentally Posts Soros’s Short Positions

by Ellen Proper and Colin McClelland

January 26, 2017, 12:48 PM GMT+5:30 January 26, 2017, 6:42 PM GMT+5:30

Bets against stocks were revealed briefly on AFM’s website

‘Human error’ blamed for publication of positions back to 2012

George Soros

Some of hedge fund billionaire George Soros’s short positions dating back to 2012 were published on the Dutch financial market regulator’s website this week due to “human error,” according to the regulator AFM.

The short positions, bets on a stock declining, were “between 0.2 percent and 0.5 percent,” of shares outstanding in the companies shorted, AFM spokesman Ward Snijders said by phone on Thursday. The Dutch regulator publishes shorts of 0.5 percent or higher on its website on a daily basis. The smaller amounts were posted by mistake, he said.

The Financial Times earlier reported that some of the positions, including bets against Dutch banks, including ING Groep NV, appeared briefly on the website on Tuesday evening. ING declined to comment on Thursday.

Soros, whose fortune is estimated at $25.2 billion by the Bloomberg Billionaires Index, is in the same league as Warren Buffett when it comes to investors copying their trades as they try to ride the coattails of the super successful. Short positions, which are typically closely guarded, in Deutsche Bank AG jumped when it was revealed in June that Soros had bet that the stock would fall after the U.K. voted to leave the European Union. The German bank fell 14 percent on the first day after the ballot.

Trump Loss

The Dutch regulator’s spokesman couldn’t disclose whether there has been contact with Soros following Tuesday’s error. A spokesman for Soros didn’t respond to an e-mail seeking comment.

The 86-year-old investor lost about $1 billion by betting against the market after the election of U.S. President Donald Trump, according to the Wall Street Journal this month. The hiring of a chief investment officer may reduce Soros’s role, the paper reported.

Soros has managed as much as $30 billion as founder and chairman at New York-based Soros Fund Management LLC. Currency bets on the pound in 1992, the Thai baht five years later and the yen in 2012-13 helped Soros attain a fortune ranked 26th globally by Bloomberg. He’s donated $8 billion to charities since founding the pro-democracy Open Society Foundations in 1979.

Regulators have pushed for more transparency around short positions. The European Union imposed rules in 2012 on short bets against some securities in the political bloc to reduce the risk of destabilizing sovereign-debt markets. The U.K.’s Financial Services Authority introduced a regulation in June 2008 requiring disclosure of short positions of more than 0.25 percent for companies that are selling new shares in rights offerings.

It's just not possible to time the market

Note: If one were waiting for a bear market to start buying in the US stock market, one would have had to wait for 20 years - from 1983 to 2000.

So, it's just not possible to time the market.

Waiting for a Bear Market

BY PRASHANTH_ADMIN ⋅ 23RD NOVEMBER 2016 ⋅ POST A COMMENT

Today I came across a interesting post by Dev Ashish at Stable Investor about why a investor (especially if he is young) should yearn for a bear market than a bull market. The logic he provides is pretty right given that the cheaper you buy a stock / index, the higher the probability that you shall make a decent return on the long run.

Then again, a bear market is a symptom of a disease rather than the disease itself. A bear market is primarily caused by a change of opinion about future growth of the economy. A good economy that is not overheated and yet growing on a consistent tick can provide way better returns than any buy you can make in a deep bear market. Don’t believe me, well check out the chart below which plots the performance of the Dow Jones Index from 1982 to 2000.

Over the period of time (18 years approximately), the Index went up 1,113% (or 11.xx times its initial value). Only once during the entire phase was a strong opportunity (Black Monday of 1987). If you started investing in 1982, you had to wait till 1987 for a bear market and if you started in 1989, your opportunity came only after the IT bubble burst.

In previous posts I have detailed about how I use multiple ways to determine whether market is bullish or bearish, but that is more from a technical perspective.

A drop of 20% (one of the ways a bear market is classified) doesn’t happen a lot of the times. In fact since 2009, we have had only three times Index has fallen by 20% or more and each time the scare is that this is just the start with worse yet to come.

But do investors really need to await for a bear market to come before investing money for the long term? Even in bull markets, you can find sectors / industries that are hitting the floor due to issues. 2008 marked the peak of the Nifty Metals has been smashed like anything. In fact, other than realty, this has been one of the worst performing Index. And yet, after each big fall, the Index has risen like a phoenix.

PSU Banks were literally written off thanks to their disclosure of high NPA’s quarter after quarter and yet in the recent months, they have given nearly 80% from bottom. Of course, none can catch the bottom and 80% is not something that could have been achieved (and the other thing it would have needed is to time the top as well). But what about 30%?

Asian Paints has been on a one way trajectory and yet if you were to check out the charts, falls of 20% or more have been all too common. Unless you believe the company has gone to dogs, does it hurt to risk a bit when stocks that are excellent have been plummeted due to one or the other issue that has taken over the media frenzy at that point of time? Or what about Apple or closer home ITC or Hindustan Unilever among hundreds of others?

Okay, you are using hindsight and selection bias to showcase companies that have survived you may claim and I plead guilty. But while companies may die, do sectors die? Nifty IT which represents the cream (and not so creamy) companies is down nearly 20% from its peak. Valuations are at multi year lows, is it worth a Buy?

While I have invested a small bit, I am waiting for confirmation of a trend reversal to plunge in more. In that way, I want the fundamental evidence I have in hand to match the technical parameters I follow. From its peak, Nifty Pharma index is down more than 20% even after considering today’s rise. Yet, given that Pharma as a Industry should continue to grow, doesn’t it make sense to risk either when it becomes too cheap (it hasn’t for now) or showing the technical evidence necessary that makes it a worthwhile sector to pick?

Do note that every opinion including mine are biased based on our circumstances and our beliefs. Anyone who isn’t holding any investment in Real estate (and that would include me) is hoping for and building a case as to why Real Estate prices should fall, but if you ask one who are invested, they can give you as logical answers as I do on why it will not fall. Either way, none of us know the future.

A bear market is useful for building stocks only if your own job is secure but deep bear markets don’t arise in a well doing economy. It arises when shit hits the fan so as to speak and when that happens, you would wish that you rather have your job back than a opportunity to buy stocks cheap. Rather than wait for a proverbial bear market, I think it makes a lot more sense to take advantage of market miss-pricing in individual stocks / sectors and hope that the long bull run continues without too many a hiccups.

http://www.portfolioyoga.com/wp/waiting-for-a-bear-market/?curator=alphaideas&utm_source=alphaideas