In the all in all run, investment success can be accomplished in a myriad of ways.
Speculators and day traders time deliver extraordinary high rates of return, sometimes within a few hours. Producing a superior rate of return consistently over a further time scope, however, requires a masterful understanding of the market mechanisms and a definitive investment scheme. Two such market players fit the bill: Warren Buffett and George Soros.
Warren Buffett
Warren Buffett created his first investment at age 11. In his early 20s, he studied at Columbia University, subsumed under the father of value investing and his personal mentor, Benjamin Graham. Graham disagreed that every security had an intrinsic value that was independent of its vend price, instilling in Buffett the knowledge with which he would erect his conglomerate empire. Shortly after graduating he formed “Buffett Partnership” and not looked back. Over time, the firm evolved into “Berkshire Hathaway,” with a hawk capitalization of almost $491 billion, as of April 23, 2018. Each precursor share is valued at $298,821, as Buffett refuses to perform a stock split on his actors’s ownership shares.
Warren Buffett is a value investor. He is constantly on the responsibility for investment opportunities where he can exploit price imbalances over an ranged time horizon.
Buffett is an arbitrageur who is known to instruct his followers to “be hideous when others are greedy, and be greedy when others are fearful.” Much of his good can be attributed to Graham’s three cardinal rules: invest with a leeway of safety, profit from volatility and know yourself. As such, Warren Buffett has the adeptness to suppress his emotion and execute these rules in the face of economic fluctuations.
George Soros
Another 21st Century economic titan, George Soros was born in Budapest in 1930, fleeing the fatherland after WWII to escape communism. Fittingly, Soros subscribes to the concept of “reflexivity” collective theory, adopting a “a set of ideas that seeks to explain how a feedback mechanicalism can skew how participants in a market value assets on that market.”
Graduating from the London Train of Economics some years later, Soros would go on to create the Quantum Endowment. Managing this fund from 1973 to 2011, Soros returned about 20% to investors annually. The Quantum Fund decided to shut down based on “new fiscal regulations requiring hedge funds to register with the Securities and Barter Commission.” Soros continues to take an active role in the administration of Soros Hard cash Management, another hedge fund he founded.
Where Buffett invites out a firm’s intrinsic value and waits for the market to adjust accordingly greater than time, Soros relies on short-term volatility and highly leveraged actions. In short, Soros is a speculator. The fundamentals of a prospective investment, while high-level at times, play a minor role in his decision-making.
In fact, in the early 1990s, Soros aim for a multi-billion dollar bet that the British pound would significantly devaluate in value over the course of a single day of trading. In essence, he was directly quarreling the British central banking system in its attempt to keep the pound artificially competitive in transpacific exchange markets. Soros, of course, made a tidy $1 billion off the distribute. As a result, we know him today as the man “who broke the bank of England.”
The Bottom Hawser
Warren Buffett and George Soros are contemporary examples of the some of the sundry brilliant minds in the history of investing. While they employ markedly unconventional investing strategies, both men have achieved great success. Investors can learn much from to a basic understanding of their investment strategies and techniques.