Market Leader, a news portal for professional traders, published another study of successful milestones in the life of internationally renowned financier George Soros this time.
He is an outstanding economist, a one-man orchestra. Apart from being a financial genius, Gorge Soros is a philanthropist and talented philosopher. He is among the few people who have turned their luck around and put the American dream in practice because a Jewish boy from Budapest cannot often become the king of the world. Soros wasn’t born with a silver spoon in mouth and anything he attained cost him huge effort. Each dollar of his wealth is saturated with the owner’s sweat. Now you have a great opportunity to learn a few lessons from George Soros, one of the most influential people worldwide.
Lesson one: Be a professional as the market forgives no mistakes.
Soros’ financial genius felt free only at 26, after George moved from England to the US. The young man founded a business for acquisition of securities. Soros’ firm offered a new arbitrage-based approach in this area calling it internal arbitrage – separate sale of combined securities, bonds and warrants before they could be officially separated. To George’s great regret, President Kennedy introduced an additional charge on foreign investments in 1963. Soros had nothing left to do and closed his business (1963).
This loss made him think over the reasons for failure in a recent case. As a result, Soros got immersed in scientific activity. Of course, a PhD sounds quite good, but George was preparing a much more respectable future for himself. Choice of philosophy was motivated by the person who taught Soros back in London School of Economics. It was Karl Popper, an outstanding philosopher, author on logics of probability and the theory of deducibility. Quite a strong and promising mixture for a speculator, both these areas of academic research can potentially give the trader the ability not only to define the most likely outcomes of events, but also to forecast them in advance. Self-analysis and work on mistakes took three years.
Lesson two: Different situations need different strategies.
Let’s remember before continuing that in 1966 G. Soros became a co-owner of Double Eagle Foundation which was later reorganized into Quantum Group. The game against the British pound became the first step to grandeur. On 16 September 1992 the pound sterling slumped against the German mark from 2.77 to 2.70 GBP/DEM (-2,52 %). Soros made 1 bn. dollars in one day and became known as ‘the man who broke the Bank of England’.
A new large-stake game required a slightly different strategy. So, the Japanese yen, 1995-1996. At that time the yen significantly appreciated to the dollar, from 128 to 78 for the greenback. But after Japanese corporations showed zero financial results the rate had to be urgently brought down since the middle of 1996. Otherwise Japanese goods would have been completely uncompetitive in the global market. Soros first bought the yen at 110-120 a dollar and bought back dollars at 80-90 yens after rate adjustment. According to expert estimates, this ‘game’ yielded 2 bn. dollars.
Lesson three: First you work for your image, later your image works for you.
Later Soros practically monopolized global media with his personality by only allowing use of his name in the press. This helped him exert influence on global economy through media. March 1993. Soros announces that gold prices should soon skyrocket because China is willing to buy a large volume of gold for its rapidly developing economy. The precious metal added 20% within four months. George simply sold gold he previously bought.
Today George Soros is a global financial operator that speculates in global financial markets through his private investment fund, Quantum Fund NV, that manages about 11-14 bn dollars of 99 private investors who include, according to Soros himself, Great Britain’s Queen Elizabeth II.
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