Monday, March 16, 2009

George Soros - good guy or bad ?

There are a few questions why George Soros is not in my radar in this blog.

Well, because it isn't time yet.  But as usual, since you ask, I will jump the queue and talk a bit about him.

There will be 2 topics in this blog that will lead to Soros.

1.  The Art of investment.
2.  Investment is a game for the Rich.

Unlike Fundamental Assessment like Buffets and Technical Analysis by some other successful investors, Soros is one of those few who do not fall exactly into either of that 2 categories.

As mentioned before, our today's money system is by large at fault but no one really can fix it.  Fundamentalists basically try to filter out the noises by sticking to good and strong businesses.  Technicalists try to follow the trend making some money when they see the big guys move.  

Soros however is the type who perfectly understand how volunerable of our finance system is but do not get bother by it, not even the social problems it may create, and then further exploit it to gain maximum out of it.  He is slightly different than "If you cann't beat it, join it" because at his scale, he sometimes create the chaos or problems himself.

Soros still do fundamental assessment NOT before but usually after he invests.  Fundamental results only add strength to his already decided investment to keep longer.  Soros only look at trends at the area where he doesn't invest too much on because he usually create the trends, why 'chase' the trend you created yourself ?

It takes money to earn more money, no one else practise this principle better than Soros.  People who don't like Soros could easily agree to this point.  Like our famous si chedet.

Despite the chaos and how many claim him as a speculator, Soros way of investment is actually quite systematic.  Although it is not as procedurals as Fundamentalists, but nevertheless quite a system by itself.  Since his system is not quatifiable so its called a investment philosophy more than a system at times.  That is also where I call it The Art of Investment - to cover all the other things Science is not covering.

Art doesn't mean NOT Science.  It just mean there is something to it that we cann't fully explain yet.  In Art, we cannot guarantee the same results even if you follow exactly what was done.

A true art is usually not complicated.  A good piece of art is usually simple.  Sometimes it could be Not Easy but nevertheless Simple.

All Soros does is to catch up with the latest happening in the world and then make investment decisions base on it.  Done !

There is no limit on the knowledge to acquire be it finance, politic or social.  When the data is inside our head, certain patterns form in it.  Then we try to relate these patterns to what we want to do - investment.  As time goes, certain linkages are form between the information and our investments.   These linkages are the formulas in our head.  These formulas usually cannot be written down clearly.  One of the reasons is by the time you write down on a piece of paper, certain event has happened that you may need to change your formula already.

All of us have this ability, like when interest rate is lower, everyone know more cash will flow in the market.  The difference is that a more experience guy would have more dimensions in his head to consider about the forest fire in Australia, the hail storm in northen America, the finish of China Olympia  ... all lead to exactly where the cash will flow to at what time.  At least he thinks so.

So the 'system' Soros use is very simple, its the same as all the other speculators who lost a lot of money.  The only differences is Soros has a very persisted way of keeping himself updated with the correct information.  While other loser speculators acted based on one or 2 piece of 'precious' info.  Secondly, other speculators are not as rich as Soros so even when they do the same thing as Soros, they will still lose out as his is the game of Money earn Money.

So like him or hate him, if you want to be him you better seriously get ready to digest what is happening to the whole world - every single piece of data.  Then you better be already very rich when you pratise what he is doing.  Else you may just be speculating into prey in this money earn money game.

The reason I don't talk much about Soros is because the line between speculation and investment in his method is very loose.  And statistically it is proven people will always stay at the wrong side of the line.

Lastly, be reminded that Buffet is the top 2 richest guy in the world and Soros stays within 20-40th in the rank (37th in 2007/8).