Agile Portfolio of George Soros

21 lis 2023

George Soros is a professional investor renowned for his expertise and role as the manager of the Quantum Fund. He is particularly known for his views on investing and economics, notably his theory of reflexivity, asserting that market value is often influenced by erroneous ideas and actions of participants, not just economic fundamentals.

While Soros has not formalized a specific set of "investment rules" as Warren Buffett has, several principles can be extracted from his writings, interviews, and how he managed investments:

Understand the principle of reflexivity: Soros largely bases his investment strategy on the concept of reflexivity. This entails the idea that market participants' biases and actions can influence market prices and the fundamental indicators that these prices should reflect. This can lead to the emergence of favorable or vicious cycles in markets, resulting in significant deviations of price trends from underlying realities.

Stay ahead: Soros is known for anticipating major economic or political shifts and positioning his portfolio to profit from them. This may involve taking unconventional positions or what he calls "bets" when he believes the market is about to undergo significant changes.

Risk management: Soros often emphasizes the importance of risk management, stating that when uncertain about the market, he prefers to reduce risks rather than attempt to predict the market direction.

Be ready to admit mistakes: One of Soros's famous quotes is, "It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong." He frequently speaks about the importance of acknowledging mistakes and taking quick action to rectify them.

Be flexible: Soros easily adapts and often changes his position as new information becomes available. He understands that financial markets are complex and constantly changing, requiring investors to be flexible and open to altering their investment thesis as conditions evolve.

Timing matters: For Soros, it's crucial not only to identify what might happen in the markets but also when it might happen. Correct timing is crucial to fully capitalize on market movements.

Preparation and opportunities: Some quote Soros as saying that he engages in a venture only when he has enough time to prepare and when a significant opportunity arises. He advocates for in-depth research and preparation so that when a good opportunity arises, the investor is ready to capitalize on it.

Soros's strategies are known for their complexity and the high level of risk they often entail. Additionally, they are influenced by his highly personal understanding of financial markets, which may be challenging for other investors attempting replication.

Recently, Soros's fund unveiled its current positions at the end of the quarter, revealing the following holdings in the Quantum Fund:



I found the position in options for the decline of QQQ interesting.

As it currently comprises 7% of the fund, making it Soros's largest position.

The number of Put options on QQQ doubled in the previous quarter.

A similar situation is observed with iShares Russell 2000 ETF (IWM).

Options for the decline of the IWM fund indicate Soros's bearish sentiments in the near future for small-cap companies.

Moreover, the position increased from 350 thousand options in the preceding quarter to 1 million options in the current one.

In IWM puts, it now represents 2.5% of the fund, ranking as the fifth-largest position, showcasing Soros’s confidence in another downturn in the near future.

It appears to be an opportune time to consider certain positions in SQQQ and TZA.

I'd like to remind you that investing in instruments like SQQQ involves increased risks of financial loss, so exercising caution is advisable.