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How To Invest $1,000 or $10,000 Like George Soros

14 April 2015 in Investing 101

Imagine having $24.2 million dollars. Now imagine having 1,000 times that amount. Well for George Soros, having a $24.2 billion net worth1 is a reality!

While you may not be able to turn $10,000 into $140 million like Soros’ Quantum Fund,2 you can still pull together $1,000 or $10,000 and easily invest it with Motif Investing using some of Soros’ investment principles.

It takes research, hypothesizing, testing and investing to be able to grow your wealth. Take a look at the principles below that Soros has applied to his investment decisions and consider incorporating them into your trades today.

6 INVESTMENT PRINCIPLES FROM GEORGE SOROS

Collaborate. Then sleep on it. Soros is known for collaborating with his advisors before initiating large trading decisions. He doesn’t insist on everyone agreeing in order to take action. However, Soros has a thorough habit of analyzing at least one opposing viewpoint. This helps balance out the decision process. After gathering everyone’s thoughts, he likes to take time to process everything, gather his own thoughts, and “to read and reflect” before making a final investment decision.3

Think bigger and apply a scientific approach. Start researching and studying current market data and trends. Then, come up with investment ideas like Soros by making investments based on where you think the markets are likely headed. Rising Interest Rates, Rising Food Prices and Wearable Tech are just a few of the trends making news right now.

Next, apply a scientific approach, testing each hypothesis on a small scale. Take your investment strategies, based on trends and market data, and make small trades as tests to analyze if they perform how you hypothesized. If a test is successful the next step you can take is to trade the same hypothesis again but on a much larger scale just like Soros.

You can utilize all of the information at your disposal from the news, research reports, or perhaps a financial advisor.

Look for disequilibrium in the markets. Do you frequently wonder if market bubbles or opportunities are emerging? Reflexivity is an investing principle that Soros has referenced repeatedly. The basic idea is that markets have a tendency to move toward disequilibrium. The actions of market participants can be exaggerated because of misinterpretations, misunderstandings, and biases. Then the loop can repeat when the market’s valuations react to those misconceptions causing further misinterpretations and repeated boom/bust cycles.4

Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.” – George Soros

Blend politics and investing. One of the primary reasons Soros was able to make such a successful trade on the British Pound in 1992 was his awareness of the political issues surrounding the UK government and the European Exchange Rate Mechanism. Soros was able to act on that investment opportunity based on those political issues and it paid off immensely.

You can formulate your own investment ideas just like Soros by analyzing political issues that affect the economy. For example, the US healthcare system continues to be a highly debated political topic that has a significant effect on our economy.

Incorporate your own views on healthcare reform into your investment strategy

Observe physical cues. Have you ever noticed an increase in physical ailments and discomforts such as back pain when you’re anxious about something or stressed out? It may sound a bit hard to believe, but George Soros has interpreted pain triggers such as headaches and backaches as signals he may need to drop an investment.5

Of course throwing your back out after lifting something heavy, or a throbbing headache after a late night out aren’t applicable warning signs of a troubled investment when it comes to this philosophy. But if you find yourself worrying day and night about an investment and getting physical pains in the process, it could a sign that it’s time to get out. Investing becomes counterproductive if you can’t sleep at night.

Look at what Soros is buying. Curious what Soros is buying lately? Some of his recent purchases include LYB, ENDP, LC, DOW, AGN, EQT, HFL, UAL, SLXP, and RLGY.6 If Soros’s trading activity intrigues you, you can research and find his stock positions through online searches and public filings,  Consider building your own custom motif today of up to 30 stocks based on the stocks Soros is holding that resonate with you.

Investment opportunities are constantly arising and George Soros has demonstrated through his success that sticking with smart investment principles can be quite profitable. Do you have a favorite Soros investment principle? Do you apply any of the above strategies to your investments?


1 Forbes, http://www.forbes.com/profile/george-soros/

2Casey Research, http://www.caseyresearch.com/cdd/23-investing-lessons-from-george-soros

3 Investopedia, http://www.investopedia.com/articles/investing/120913/george-investing-soros-way.asp

4 Casey Research, http://www.caseyresearch.com/cdd/23-investing-lessons-from-george-soros

5 Investopedia, http://www.investopedia.com/articles/investing/120913/george-investing-soros-way.asp

6 GuruFocus, http://www.gurufocus.com/StockBuy.php?GuruName=George+Soros

Photo Credit: https://www.flickr.com/photos/friendsofeurope/6096735096 
References to stocks or strategies in this article are for informational purposes only and no references should be considered a recommendation or guarantee a future performance.
  1. Rob
    15 Apr at 5:34 pm

    What an inspiring article. I’ve admired Soros for as long as I can remember. It’s hard to believe he’s turning 85 later this year. I hope I’m as sharp as he is in my 80s! His investment principles make a lot of sense and he sure has proven that they work.

    I really like the Soros quote too “Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.”

    Reply
  2. Jackie
    15 Apr at 6:49 pm

    Fascinating stuff! I never knew some of these strategies. Soros is definitely a macro thinking/trader. It’s amazing how much opportunity is out there for those who have the capital and are willing to take risks.

    Reply
  3. 16 Apr at 9:55 am

    Lending Club is a fascinating company with a lot of momentum.

    Reply
    • Lend Free
      28 Apr at 7:16 pm

      Prosper just raised money at TRIPLE the valuation from a year ago. There’s a lot of fintech momentum for sure, and Motif Investing is leading the way.

      Reply

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