George Soros Quotes
128 George Soros Quotes
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How good are markets in predicting real-world developments? Reading the record, it is striking how many calamities that I anticipated did not in fact materialise.
George Soros
Financial markets constantly anticipate events, both on the positive and on the negative side, which fail to materialise exactly because they have been anticipated.
George Soros
It is an old joke that the stock market has predicted seven of the last two recessions.
George Soros
We can take as an example of the first kind of imbalance the desire of the Japanese to produce more than they consume, and the apparent desire of the United States to consume more than it produces. If unchecked, these tendencies will lead in due course, to the rise of Japan as the dominant economic power of the world and to the decline of the United States.
George Soros
The United States, in particular, has much to lose if the dollar ceased to be the main international currency. For one thing, the home country of the reserve currency is in an advantageous position to render financial services to the rest of the world. More important, the United States is at present the only country that can borrow unlimited amounts in it’s own currency. If the dollar were replaced by an international currency, the United States could continue borrowing, but it would be obliged to repay it’s debt in full. At present, it is within the power of the US government to influence the value of it’s own indebtedness and it is almost a foregone conclusion that the indebtedness will be worth less when it is repaid than it was at the time when it was incurred.
George Soros
There are limits to the willingness of the rest of the world to finance the US budget deficit and we may be currently approaching these limits. But the Japanese for one, seem content to finance the United States even in the knowledge that they will never be repaid in full, because that is the way Japan can become ‘number one’ in the world. Japan has already taken over the role of the United States as the major supplier of capital to the rest of the world and it is only a question of time before the yen takes over as the major reserve currency. The transition is likely to be accompanied by a lot of turmoil and dislocations, as was the transition from the pound sterling to the dollar in the interwar period.
George Soros
In sum, the creation of an international central bank does not constitute a permanent solution. Indeed, the very idea that it constitutes a permanent solution carries with it the seeds of the next crisis.
George Soros
The crash of 1987 came just as unexpectedly as the crash of 1929. There had been a general awareness that the worldwide boom was unsound and unsustainable, but few people got their timing right. I was as badly caught as the next fellow. I was convinced that the crash would start in Japan, that turned out to be an expensive mistake.
George Soros
In retrospect, it is easy to reconstruct the sequence of events that led to the crash. The boom had been fed by liquidity; it was a reduction in liquidity that established the preconditions for a crash. In this respect also 1987 resembles 1929, it will be recalled that the crash of 1929 was preceded by a rise in short term money rates.
George Soros
The consequences for the rest of the world were more grievous. The government bond market in the US had become dependent on Japanese buying. When the Japanese turned sellers, even in relatively small quantities, the bond markets suffered a sinking spell which went beyond any change justified by economic fundamentals.
George Soros
Markets are often wrong.
George Soros
There had been large capital movements into weak currency countries like Italy, Spain and Portugal.
George Soros
The real economy was stimulated by credit expansion. Why should it not be negatively affected by credit contraction?
George Soros
In the savings and loan crisis of 1986 there were grave doubts whether a mortgage insurance company, Mortgage Guaranty Insurance (MAGIC) would be able to survive. The stock fell precipitously, and I bought it in the belief that it’s business model was sound enough to withstand a severe test. I was right, and I made a killing. Generally speaking the more an investment thesis is at odds with the prevailing view, the greater the financial rewards one can reap if it turns out to be correct.
George Soros
Participants act not on the basis of their best interests but on their perception of their best interests, and the two are not identical.
George Soros
In freely floating exchange rate regimes for instance, the reflexive relationship between market valuations and the so-called fundamentals tends to generate large multi-year waves.
George Soros
We are in the middle of a financial crisis the likes of which has not been seen since the great depression of the 1930s. To be sure, it is not the prelude to another Great Depression. History does not repeat itself. The banking system will not be allowed to collapse as it did in 1932 exactly because it’s collapse then caused the Great Depression. At the same time, the current crisis is not comparable to the periodic crises which have afflicted particular segments of the financial system since the 1980s – the international banking crisis of 1982, the savings and loan crisis of 1986, the portfolio insurance debacle of 1987, the failure of Kidder Peabody in 1994, the emerging market crisis of 1997, the failure of Long Term Capital Management in 1998, the technology bubble of 2000. The crisis is not confined to a particular firm or a particular segment of the financial system, it has brought the entire system to the brink of a breakdown, and it is being contained only with the greatest difficulty. This will have far-reaching consequences. It is not business as usual but the end of an era.
George Soros
One cannot predict what new methods of credit creation may be invented and what new sources of funds may be discovered.
George Soros
It is easier to explain how the present position has been reached than it is to predict where it will lead.
George Soros
There are no grounds, however for predicting a prolonged period of credit contraction or economic decline in the world as a whole because there are countervailing forces at work. China, India and some oil producing countries are experiencing dynamic developments which may not be significantly disrupted by the financial crisis and a recession in the United States. The United States recession itself will be cushioned by an improvement in the current account deficit.
George Soros
The post World War II period of credit expansion, will not be followed by an equally long period of credit contraction. Boom-bust processes are asymmetric in shape: a long, gradually accelerating boom is followed by a short and sharp bust. Consequently, most of the credit contraction can be expected to occur in the near term.
George Soros
Staying ahead of the curve.
George Soros
Reflexivity: A two way feedback mechanism between thinking and reality. A two way connection between present decisions and future events.
George Soros
[1998 –Asian Financial Crisis] These events led most market participants to reduce their exposure all round. Banks are frantically trying to limit their exposure, de-leverage, and reduce risk. Bank stocks have plummeted. A global credit crunch is in the marking. It is already restricting the flow of funds to the periphery, but it has also begun to affect the availability of credit in the domestic economy. The junk bond market, for instance, has already shut-down.
George Soros
Fallibility means that our understanding of the world in which we live is inherently imperfect. Reflexivity means that our thinking actively influences the events in which we participate and about which we think. Because there is always a divergence between reality and our understanding of it, the gap between the two, which I call the participants’ bias, is an important element in shaping the course of reality.
George Soros
The more we think, the more we have to think about.
George Soros
In my financial dealings, the discover of error would often present an opportunity to take whatever profits I had made from my flawed initial insight or cut my losses if the insight had not yielded even a temporary profitable result. Most people are reluctant to admit that they are wrong; it game me positive pleasure to discover a mistake because I know it could save me from financial grief.
George Soros
On the objective level, I recognised that the companies or industries in which I invested were bound to be flawed and I preferred to know what the flaws were. This did not stop me from investing; on the contrary, I felt much safer when I knew the potential danger points because that told me what signs to look for to sell my investment. No investment can offer superior returns indefinitely. Even if a company has superior market position, outstanding management, and exceptional profit margins, the stock may become overvalued, management may become complacent, and the competitive or regulatory environment may change.
George Soros
It is wise to be constantly looking for the fly in the ointment. When you know what it is, you are ahead of the game.
George Soros
I would formulate a hypothesis on the basis of which I would invest. The hypothesis had to differ from the accepted wisdom and the bigger the difference the greater the profit potential. If there was not difference, there was no point in taking a position.
George Soros
A financial hypothesis does not have to be true to be profitable; it is enough that it should come to be generally accepted. But a false hypothesis cannot prevail forever. That is why I liked to invest in flawed hypotheses that had a chance of becoming generally accepted, provided I knew what the flaw was. It allowed me to sell in time. I called hypotheses fertile fallacies and I built my theory of history, as well as my success in financial markets, around them.
George Soros
People frequently engage in philanthropy because they want to feel good, not because they want to do good.
George Soros
Networking means not working.
George Soros
When I was an active fund manager, I used to shun publicity. I considered it the kiss of death to be on the cover of a financial magazine. If I expressed a market view in public, I found it more difficult to change my mind.
George Soros
Reflexivity offers a shortcut. A theory does not need to be true to affect people’s behaviour.
George Soros
Base metals cannot be turned into gold by incantation, but people can get rich in financial markets and powerful in politics by propounding false theories or self-fulfilling prophecies.
George Soros
Optimising the ratio between risk and reward – including accepting higher risks at times when the ratio was favourable.
George Soros
Just as economists have been said to predict ten of the last three recessions, I did the same with boom/bust sequences. I was wrong most of the time, because not every situation lends itself to the formation of a reflexive thesis, but the few occasions when I was right, made the effort worthwhile because the profit potential was so much greater than in near-equilibrium situations. That is how I operated as a fund manager. It required imagination, intuition and a relentlessly critical attitude.
George Soros
The belief in fundamentals is eroding and trend-following behaviour is on the rise.
George Soros
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