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4 Investing Lessons From Billionaire Investor George Soros

By David Butler – Jun 13, 2020 at 8:31AM

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Warren Buffett gets more attention, but George Soros has had an investment career of the same caliber.

While George Soros might not be a household name like Warren Buffett, he's one of the most successful investors in modern history. Having donated $32 billion to causes, Soros' current wealth is $8.3 billion according to Forbes. Throughout his colorful life, there are lessons to be learned for investors aspiring to be successful.

1. Find what works for you

Soros doesn't play by the typical rules of diversification, value, and long-term time horizons. He's a speculator. The investor used leverage and big gambles throughout his career based on his own due diligence of situations. Fundamentals hold a lot less relevance here.

Jar filled with money.

Image source: Getty Images.

While it's probably not the best idea to go out tomorrow and leverage billions in currency trades, there's a lesson here on finding your style and your individual way of doing things. If you're good at something, use it to your advantage.

2. Look for economic mistakes and exploit them

It might not even be an economic mistake, as much as a scenario that can be taken advantage of. Some of George Soros' biggest moves were regarding currency speculation. Principally, he's constantly referred to as "the man who almost bankrupted England." The reason for this is his bet against the pound in the 1990s.

European countries were actively pegging currencies against each other in order to stabilize exchange rates. When Britain entered into the fray, Soros basically shorted the pound by borrowing British currency and then converting it to German currency in a bet that the British pound would devalue. The gamble paid off, and Soros walked away with a clean $1 billion in one day. By the time it was finished, he made almost $2 billion. It was most certainly a controversial move, as Soros benefited as the country suffered.

3. Speculation is a high-stakes game

If you're going to bet big, you had better be prepared to lose big. Though rare, Soros had some big losses.

In 1987, he lost $300 million by incorrectly assessing that the market would keep going up. It was chump change compared to the $2 billion loss experienced during the Russian debt crisis. Of all his losses, the worst was probably the tech bubble of 1999. While Soros was correct in assuming the bubble would burst, his timing was way off. He would end up losing billions.

Obviously, George Soros had far more wins than losses. Still, the lesson should be taken to heart. If you're going to take big swings, you had better be capable of handling the big misses. The kinds of trading that Soros did is not for those with a weak stomach.

4. Circumstance doesn't determine your life

If you're dealt a hand you don't like, you can always change it. While it may not pertain specifically to the market, it's important to take note of Soros' life. He was born in Hungary in 1930 when it wasn't a great time to be of Jewish descent in Europe. His father arranged for them to obtain false identities in order to hide their Jewish roots when Germany occupied Hungary.

That kind of danger and survival alters the way you see the world. Soros noted that the ensuing Soviet occupation of Hungary after the war made for more tough times. Did he stay and accept circumstance? No. He made his way to London at the age of 17 and studied things like philosophy before becoming an arbitrage trader in New York.

The lesson here is simple: You can change where you're at in life. His father didn't accept the circumstances for his family; he acted. Soros didn't stay in Soviet Hungary; he made a move. If you're willing to do what it takes, you never know where you'll end up.

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