George Soros has returned to bearish investments lured by opportunities of what he sees as coming economic troubles. Soros is worried about the global economic outlook, predicting an imminent significant market shift may be at hand. Soros Fund Management LLC, which currently manages about $30 billion of funds on behalf of Soros and his family, sold stocks to buy gold and shares for gold miners in anticipation for weaknesses in the various markets in the economy. It is custom for investors to view gold as a haven during economic turmoil.
Soros is the founder and chair of Open Society Foundation and Soros Fund Management. He gained fame in 1992 when risked $10 billion of his money to a single currency speculation when he gambled the British Pound. George Soros bet was that British Pound had to devalue its currency and no matter how much intervention they try would not avert the devaluation of the currency. He turned out to be right in his gamble and a single day; the trade generated a profit of $1 billion in profit. As a result, he is referred by many people as “the man who broke the Bank of England”.
Soros is not new to controversy as he was cited as a key trader behind the Asian financial crisis in 1997 having large bet against the Thai baht. He has also criticized the China’s economic outlook saying that the strategies being implemented by the China’s authorities are focusing more on growth and failing to recognize the importance of debt control. Chinese authorities have been angered by Soros comment saying that Soros has been making such baseless prediction without any facts reflecting the real economic outlook of China.
One of the reasons Soros believes the world economy is headed in the wrong direction is the fear he has that China’s debt is going to cause havoc in the global economy. George Soros believes that if the China’s debt problem is imitating the U.S. debt surge in 2007 which later led to the world economic crisis. According to Soros, China will not avoid a hard landing especially at a time when the authorities are focusing on stimulating growth instead of controlling the level of debt.
To benefit from the imminent global economic slowdown, Soros has decided to sell stocks and buy up the gold investments. One of the world’s top investors is now investing in gold betting against equities. Again, He appears to benefit from his decisions since the S&P rose about 20% from 2013 to 2014. It is a strategy that Soros has made much of his wealth. Investors believe it is a good plan because buying puts a portfolio from tail risk especially if one can afford it.
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