Buy bubbles, bet big and backache – Soros’s secrets

George Soros is 84 today. His career is remarkable both for its longevity and its returns – his Quantum fund has generated $39.6 billion in profits over the last four decades, making Soros the most successful hedge fund manager in history.

How has Soros managed to stay at the top for so long? What are the secrets to his success? Can investors learn from his methods? Or is Soros a one-off, a gifted speculator with an inimitable knack for timing?

Short selling

Never dependent on rising markets, Soros has long been a skilled exponent of short selling, where traders profit by betting on market declines. Although most equity markets went nowhere in the 1970s, Soros’s market-neutral trades helped fuel returns of more than 4,000 per cent during that difficult decade.

His most famous bet was in September 1992, when Soros’s shorting of sterling forced the Bank of England to devalue the currency and leave the European Exchange Rate Mechanism (ERM).

That trade earned Soros an estimated £1 billion and ensured he will forever be remembered as the man who “broke” the Bank of England.

Alarmed by the deteriorating global economy, he netted returns of 32 per cent after coming out of retirement in 2007 and even profited amid the chaos of 2008, a disastrous year for most investors.

Last year, Soros’s main fund earned an estimated $1 billion by shorting the Japanese yen.

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