Follow the man who broke the bank of England – George Soros to invest

Follow the man who broke the bank of England – George Soros to invest

Preface

George Soros is one of the world’s leading investment gurus. Soros is looking for investment opportunities all over the world, covering foreign exchange, futures, stocks and so on. His book “The Alchemy of Finance” includes the core ideas of his transactions, and I believe it has certain reference for ordinary investors!! Our platform summarizes and organizes his central ideas, hoping to inspire investors.

The market is unpredictable

Soros believes that financial markets are often unpredictable, so an investor needs to have a variety of different up-front scenarios.

Find opportunities in chaos

Soros said: “The financial market is inherently unstable. The flow of capital is full of booms and busts, and there are positives and shorts. Wherever the market is chaotic, you can make money. As long as you can identify the chaos, you can become rich. The more chaotic the market, the more money you can make.”

Make money by accident

Making money depends on discounts on normal-value items and betting on unforeseen events.

One night in 1972, Soros overheard National City Bank entertaining securities analysts for dinner, something that had never happened before, and he was quick to believe that something unusual was going to happen. He immediately advocated buying bank stocks, and he made a 50% profit.

Not with the “flock”

Hype is like the law of the forest in the animal world, specifically attacking the weak.
The herding effect is the key to the success of each of our speculations, and if it does not exist or is fairly weak, it is almost certain that we will not succeed.

Never trust the market

Soros said: “The market movement does not necessarily reflect the nature of the market, but reflects the expectations of investors, but investors are often irrational. If there are only a few people on the trading floor looking at the market, you should enter the market; if there are too many people at the trading desk, so it’s time to leave.”

It doesn’t matter if you’re wrong or right, what matters is…

It doesn’t matter if you’re right or wrong, it’s how much money you make when you’re right and how much money you lose when you’re wrong. The most important thing for an investor is the “magnitude of correctness”, not the “frequency of correctness”.

If your odds of winning on a bet are high enough, bet big. When Soros felt he was right, few investors made bigger bets.

Pay attention to risks, do not invest your entire wealth

The hardest thing to judge is what level of risk is safe. Risk is the possibility of you suffering a loss. There are three situations that must be faced: Sometimes you know the nature and probability of risk events (like tossing a coin); Sometimes you only know the properties of the event, but not its probability (For example, the price of a given stock within 20 years); Sometimes you don’t even know the nature of events that might hurt you in the future (like a vicious black swan event).

In 1987, after Soros carefully examined the global economic situation, he concluded that the collapse started in Japan, but he did not expect speculative funds to pour into the Japanese stock market, and then hit a new high. This proves that Soros can also make mistakes, but he has a commandment, that is, “When taking a risk, do not bet your entire net worth, and don’t put all your eggs in the same basket.” So he will never be “killed” by the market.

When attacking, you must be ruthless, and you must do your best; if things don’t go as expected, saving your life is the first consideration. The best way to be “safe” is to have a “margin of safety”.

Learn to admit defeat

Soros said: “Most investors are reluctant to sell. They are reluctant to sell when they rise. They are even more reluctant to sell when they fall. They often leave the market at the lowest point.” In the eyes of Soros, human cognition of things is incomplete and flawed, so it is inherently error-prone. When Soros made a mistake, he would reflect on it, which made him extraordinary.

“Being in the market, you have to be prepared to suffer. I’m rich only because I know when I’m wrong. I basically ‘survive’ because I realize my mistakes. We should realize that’s how humans are: It’s not shameful to be wrong, it’s shameful not to be able to correct your mistakes.”

Rest is also very important, the authorities are obsessed

Rest is actually a part of work. We have to stay away from the market, so that we can see the market more clearly. Those who stay in the market every day will eventually be swayed by every little detail that appears in the market, and eventually lose their direction at all and be fooled by the market.

I only go to work when I have a reason to go to work, and I actually do things that day. Keeping a busy transaction state all the time creates a lot of fees and errors. Sometimes being less active is often the best thing an investor can do.

Investing is boring

If investing is an entertainment and you’re having fun, you’re probably not making much money. Really good investments are boring. If you’re very excited about investing, you’re probably gambling, not investing. It’s better not to be a gambler, and the best way to not be a gambler is to only bet when the odds are in your favor.

Learn from history, but don’t be superstitious about history

Economic history is a series based on illusions and lies. The interpretation of economic history is never based on a real script, but it paves the way for the accumulation of enormous wealth. The way to do this is to recognize the illusion and put it into it, before the illusion is known to the public. exit the game.

Economic history is an endless play of lies, not truth. Being able to explain events in the past in words does not mean that the explanation is correct or that the basis of a theory can be used to predict the future. Humans have a disadvantage of being “smart after the fact”.

In real life, true equilibrium is rarely possible—market prices are accustomed to fluctuating. Equilibrium is the basis for the assumptions made by many macroeconomists, but Soros believes that equilibrium is actually an illusion. Equilibrium can make the math work perfectly, but it often doesn’t match the truth. Soros once said, “Economic thinking needs to start thinking about real-world policy issues, rather than simply making more mathematical equations.”

The formation of Soros’s investment views is not based on rationality, for example:“Short-term volatility tends to rise when long-term trends lose momentum, for one simple reason—those who follow the trend have lost their way.” Soros also believed: “The boom-collapse process is morphologically asymmetric, with a long, gradual boom often followed by abrupt, short-lived collapses.”

No investing style is the greatest style

What is special about Soros investing is that there is no particular investment style. More precisely, he is constantly changing his style to suit different conditions. Instead of playing cards according to existing rules, seek changes in the rules of the game.

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