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George Soros- “The Master of Speculation”

  
  Education
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Soros: “The Myth”

Soros’ “The Alchemy of Finance” is a seminal investment book… it should be read, underlined, and thought out page-by-page, concept-by-idea. He’s the best pure investor ever… probably the finest analyst of the world in our time.”

-Barton Biggs

Soros: “The Reality”

“My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is B.S., I mean, you know the reason he changes his position in the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s his early warning sign.”

-George Soros’ son, Robert

George Soros on Himself

“My approach works not by making valid predictions but by allowing me to correct false ones.”

-George Soros

Soros and Exits

“When George is wrong, he gets the hell out. He doesn’t say, ‘I’m right, they’re wrong.’ He says, ‘I’m wrong,’ and he gets out, because if you have a bad position on, it eats you away. All you do is think about it — at night, at your home. It consumes you. Your eye is off the ball completely. This is a tough business. If it were easy, meter maids would be doing it.”

– Alan Raphael (Ex-Soros CIO)

17 Points from William J. O’Neil

  
  Education
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READITWilliam O’Neil is likely one of  the greatest traders of our time based on many things. O’Neil made a huge amount of money while he was only in his twenties, enough to buy a seat on the New York Stock Exchange. He runs an amazingly successful investment advisory company to big money firms. He is also the creator of the CAN SLIM investment strategy which the American Association of Individual Investors named  the top performing investment strategy from 1998 to 2009. This non-profit organization tracked more than 50 different investing methods, over a 12 year time period. CANSLIM showed a total gain of 2,763% over the 12 years. The CAN SLIM method is explained in O’Neil’s book “How to Make Money in Stocks”

Those closest to O’Neil that have seen his private trading returns say that they are greater tna Warren Buffett of George Soros over the same period of time. Here are some of the best things that he is quoted as having said.

RISK MANAGEMENT

  1. I make it a rule to never lose more than 7 percent on any stock I buy. If a stock drops 7 percent below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation.
  2. Some people say, “I can’t sell that stock because I’d be taking a loss.” If the stock is below the price you paid for it, selling doesn’t give you a loss; you already have it.
  3. Letting losses run is the most serious mistake made by most investors.
  4. The whole secret to winning in the stock market is to lose the least amount possible when you’re not right.

METHOD

  1. 90% of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework.
  2. The first step in learning to pick big stock market winners is for you to examine leading big winners of the past to learn all the characteristics of the most successful stocks. You will learn from this observation what type of price patterns these stocks developed just before their spectacular price advances. (more…)

Be Yourself

  
  Education
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Everyone in this business will tell you how to be and what to do, but the bottom line is that you’ve got to always be yourself – flaws, emotions, stupidity, and all.

There’s a saying that the stock market is an expensive place to figure how who you really are but I completely disagree. Through the many years I’ve been trading, I’ve learned much more about myself and the way I am both good and bad than I think I would have any other way. And, for that I’m so very grateful.

It is with little doubt that my experience in the markets have in turn made me into a much better human being. For example, one who thinks before acting, one that appreciates the importance of looking at situations from different points of view, one that knows that you can do everything right but still be wrong, one that understands the influence that emotion has on decision-making, one that remembers that no matter what mistakes you and I make today – tomorrow we will have another opportunity to do better. I’ve learned a great deal more, but I think you get the point.

Speaking of which, a number of people have asked me recently that if train people to “be more like me” in my mentorship group. The truth is that I try my darndest to never do that. My goal with those who I personally mentor is to help them become who they really are and, by extension, to take full advantage of their own personality and skills whatever they may be and at whatever level they currently are. The primary problem, however, is that many of us really believe the key to success is to be more like others whether it be Warren Buffett, David Einhorn, George Soros, Doug Kass, Jim Chanos, Whitney Tilson, Jim Cramer, or whoever you admire and respect. As you know, one of the fastest growing businesses on the Internet right now is to enable you in new and exciting ways to trade and invest just like others, but in my view, that will only take you so far in your personal journey. In the markets, sooner or later, you have to find your own path!

Each of us have our own skills, strengths, weaknesses and personalities and matching those with a strategy you can use and develop over time is the closest key to your future success that I can help you with.

Bottom line – don’t be like me or anyone else for that matter, but instead just be yourself. Use this time in your life to find ways to take full advantage of your own God-given talents and skills as you develop them. While it is ok and, in fact recommended, that you try to learn as much as you can from others (I know I have), at the same time you must also understand and appreciate that to true key to success is to find your own path just like every trader and investor who you so admire right now has already done.

Philosophical speculation

  
  Education
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I used to do a lot of philosophical speculation as a young man. I wasted a large part of my youth regurgitating certain ideas. Then I discovered that one can learn a great deal more through action than through contemplation. So I became an active thinker where my thinking played an important role in deciding what actions to take and my actions play an important role in improving my thinking. This two-way interaction between thinking and action became the hallmark of my philosophy and the hallmark of my life. – George Soros

speculation

15 Great Investor & Trader Quotes

  
  Education
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Warren Buffett (Net Worth $39 Billion) – “‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

George Soros (Net Worth $22 Billion) – ”I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

David Rubenstein (Net Worth $2.8 Billion) – “Persist – don’t take no for an answer. If you’re happy to sit at your desk and not take any risk, you’ll be sitting at your desk for the next 20 years.”

Ray Dalio (Net Worth $6.5 Billion) – “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look at themselves and others objectively.”

Eddie Lampert (Net Worth $3 Billion) – “This idea of anticipation is key to investing and to business generally. You can’t wait for an opportunity to become obvious. You have to think, “Here’s what other people and companies have done under certain circumstances. Now, under these new circumstances, how is this management likely to behave?”

T. Boone Pickens (Net Worth $1.4 Billion) – “The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.”

Charlie Munger (Net Worth $1 Billion) – “If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.”

David Tepper (Net Worth $5 Billion) – “This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.”

Benjamin Graham  – “The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.”

Louis Bacon (Net Worth $1.4 Billion) – “As a speculator you must embrace disorder and chaos.”

Paul Tudor Jones (Net Worth $3.2 Billion) – “Were you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt. After a while size means nothing. It gets back to whether you’re making 100% rate of return on $10,000 or $100 million dollars. It doesn’t make any difference.”

Bruce Kovner (Net Worth $4.3 Billion) – ” My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.”

Rene Rivkin (Net Worth $346 Million) – “When buying shares, ask yourself, would you buy the whole company?”

Peter Lynch (Net Worth $352 Million) – “I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.”

John Templeton (Net Worth $20 Billion)– “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”

John (Jack) Bogle (Net Worth $4 Billion) – “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

9 Wisdom Quotes from George Soros

  
  Education
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George Soros doesn’t need an introduction. He is a living trading legend. Here are some of the smartest things he has ever said about markets. His thoughts are in brown.

1. Perceptions affect prices and prices affect perceptionsGeorge-Soros-gold

I believe that market prices are always wrong in the sense that they present a biased view of the future. But distortion works in both directions: not only do market participants operate with a bias, but their bias can also influence the course of events.

For instance, the stock market is generally believed to anticipate recessions, it would be more correct to say that it can help to precipitate them. Thus I replace the assertion that markets are always right with two others: I) Markets are always biased in one direction or another; II) Markets can influence the events that they anticipate.

As long as the bias is self-reinforcing, expectations rise even faster than stock prices.
Nowhere is the role of expectations more clearly visible than in financial markets. Buy and sell decisions are based on expectations about future prices, and future prices, in turn are contingent on present buy and sell decisions.

2. On Reflexivity

Fundamental analysis seeks to establish how underlying values are reflected in stock prices, whereas the theory of reflexivity shows how stock prices can influence underlying values. One provides a static picture, the other a dynamic one.

Sometimes prices change before fundamentals change. Sometimes fundamentals change before prices change. Price is what pays and until expectations change, prices don’t change. What causes expectations to change? – it could be change in fundamentals or change in prices. So what I am saying is that sometimes prices could be manipulated to change expectations, which will fuel further price momentum in a self-reinforcing way.

3. “Once a trend is established it tends to persist and to run its full course.” – Sentiment changes slowly in trending markets (up or down) and extremely fast in choppy, range-bound markets.

4. “When a long-term trend loses it’s momentum, short-term volatility tends to rise. It is easy to see why that should be so: the trend-following crowd is disoriented.” (more…)

Trading From Your Gut, by Curtis Faith

  
  Education
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CHAPTER 1

The Power of the Gut

“The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.”
—Albert Einstein

George Soros, one of the greatest traders alive, trades from the gut. He has widely remarked on the correlation between his backaches and trading choices. In the autobiographical Soros on Soros, he wrote:

 I rely a great deal on animal instincts. When I was actively running the fund, I suffered from backache. I used the onset of acute pain as a signal that there was something wrong in my portfolio. The backache didn’t tell me what was wrong—you know, lower back for short positions, left shoulder for currencies—but it did prompt me to look for something amiss when I might not have done so otherwise.

Some traders might scoff at the idea of making decisions based on “feelings” or intuition. They see the trader’s role as one who remains calm and collected, rationally choosing the right course while those around them are tossed about by their emotions. They believe that Soros is either lying or fooling himself. They don’t see how gut instinct can help. Yet many successful traders feel otherwise. Who is right? Is one approach better than the other?

If you are one of those traders who doesn’t believe that gut instinct or intuition has any place in trading, I invite you to keep an open mind. I, too, once felt as you did. After all, I was trained to take a very systematic and logical approach to trading as a Turtle. I believed that it was important to keep your emotions in check. I ­didn’t believe in trading from the gut.

Trading from your gut is a way of tapping into the extra power of the right hemisphere of the brain.

What I didn’t realize at the time, however, is that there is a big difference between trading emotionally and trading from your gut. Trading emotionally means reacting to fear and hope, which can destroy your trading decisions. Trading from your gut is different. It is a way of tapping into the extra power of the right hemisphere of the brain, which can be a powerful, effective, and entirely rational addition to any trader’s repertoire. (more…)

George Soros- “The Master of Speculation”

  
  Education
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 sorosSoros: “The Myth”

Soros’ “The Alchemy of Finance” is a seminal investment book… it should be read, underlined, and thought out page-by-page, concept-by-idea. He’s the best pure investor ever… probably the finest analyst of the world in our time.”

-Barton Biggs

Soros: “The Reality”

“My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is B.S., I mean, you know the reason he changes his position in the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s his early warning sign.”

-George Soros’ son, Robert

George Soros on Himself

“My approach works not by making valid predictions but by allowing me to correct false ones.”

-George Soros

Soros and Exits

“When George is wrong, he gets the hell out. He doesn’t say, ‘I’m right, they’re wrong.’ He says, ‘I’m wrong,’ and he gets out, because if you have a bad position on, it eats you away. All you do is think about it — at night, at your home. It consumes you. Your eye is off the ball completely. This is a tough business. If it were easy, meter maids would be doing it.”

– Alan Raphael (Ex-Soros CIO)

 

10 Trading Principles of George Soros

  
  Education
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george_soros“I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

Understanding that he was not always right enabled him to cut losses short and position size right.

“My approach works not by making valid predictions but by allowing me to correct false ones.”

Soros’ is flexible in his trades, he changes his mind and reverses positions when needed. He does not marry his trades.

“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.”

George Soros knows that the key to profitability for him is more about big wins and small losses than his winning percentage. 

“The markets are always on the side of exuberance or fear. It’s fear and greed. Right now greed has the better of it, which is rather nice (for investors) as long as it doesn’t get out of hand,”

Market trends are caused more by the extremes of  investors emotions than fundamental reasons. (more…)

Why it would be a mistake to trade like George Soros.

  
  Education
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Soros’ prowess in the markets is legendary, so much so that deconstructing his process in order to learn the secret to his success has become a cottage industry in financial circles.  In the world of  “Market Wizards,” Soros is Saruman.  Tolkien baby…look it up.

However, in the Times’ article, his son Robert demystified the source of the Elder Soros’ alchemy in such a simple and definitive way that it may drive market historians to acts of self-immolation.

Apparently It all comes down to a pain.  In the back to be specific.

According to his son, Robert, Soros’s trading was always influenced by more than reflexivity. “My father will sit down and give you theories to explain why he does this or that”, he once said, “but I remember seeing it as a kid and thinking, ‘Jesus Christ, at least half of this is bullshit’.

“I mean, you know [that] the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm and it’s this early warning sign.”

Soros has admitted to relying greatly on “animal instincts”, saying the onset of acute pain was often “a signal that there was something wrong in my portfolio”.

His decisions, then, “are really made using a combination of theory and instinct”.

That’s right.  Though you and I did our damnedest to read between the lines and glean some sort of insight from The Alchemy of Finance in the 80′s and again with Soros on Soros in the 90′s, it was all for naught.  Now we know the true source of this modern-day Tim The Enchanter’s genius.  Monty Python baby…..look it up.

This revelation might tempt some of you to adopt the same market style as Mr. Soros, a view I wholeheartedly endorse, as long as the profile fits.  It’s easy to see if a spasm based methodology is right for you by answering a few simple questions.

  1. Are you a passionate student of the market?
  2. Are you open to considering a wide range of investment themes?
  3. Have you ever booked a $1 billion dollar single-day profit by breaking a sovereign bank?
  4. Did you marry a 41-year junior third wife on your $22 million dollar Westchester estate while Paul Tudor Jones and Julian Robertson looked on?
  5. Have you booked over $40 billion in cumulative profits?
  6. Do you have a full head of hair well into your eighth decade on this planet?

(more…)

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