Is George Soros a Contrary Indicator?

Billionaire investor and philanthropist George Soros was in the news again Monday morning telling a German newspaper that we've seen the worst of the financial market crisis and that the global economy will soon be on the mend as reported by Reuters.

"The economic freefall has been stopped, the collapse of the financial system averted. National economic stimulus programs are starting to take effect. The downward dynamic is easing," Soros told the newspaper.

"I expect the recovery to make up for around half of the downturn we have had and then to move into stagnation," Soros said. "Asia will be first to find out of the crisis, but America is also currently doing that."

Hmmm...

Is there any reason to think that this May's forecast will be any better than last May's?

Recall that, shortly after the Bear Stearns crisis early last year, what, at the time, may have appeared to be the culmination of market disorder stretching back to late-2007, Mr. Soros famously declared the equivalent of an "all clear", confidently stating that the "acute phase" of the crisis had passed.

This was one year ago, before the the biggest financial crisis since the Great Depression last fall, and before the global economy and world financial markets began the radical transformation that is still very much in progress today.

Here's the Bloomberg story from a year ago.

May 20, 2008 - Billionaire investor George Soros said the "acute phase" of the global credit crisis is over, and the fallout will lead to recessions in the U.K. and the U.S.

"Financial institutions have been severely damaged and we are currently in a situation that will probably, I think almost inevitably, result in a recession certainly in the United States and most likely in England also,'' he said in an interview with BBC Radio 4 today.
...
"We've had a pretty serious crunch, but the acute phase is behind us," Soros said. "Now we have to feel the effects. In the case of the U.K., you've had a housing bubble that in terms of price increases has been greater than in the U.S."

Is George Soros now a contrary indicator?

Comments

[History Buf...:]

Soros and Buffett and a heck of a lot of very smart people with long running track records were proven wrong last year. These are extraordinary times we're going through and anyone can be forgiven for misestimating the gravity of the crisis to date.

That being said, Soros and Buffett can both afford to be wrong and lose a few millions (maybe even billions) and it won't kill them. I can't, nor can any of my friends.

May 11 05:35 PM

[Eric in IL:]

I wouldn't put Soros and Buffett side by side. Soros has been in trouble with regulators before. He knew how to manipulate markets or parts of markets. I put a lot more faith in Rogers.
Cetin: Dollar will strengthen near-term. And bearish news came out of China last night. They are seeing deflationary pressure.
After the near-term pullback, I still think Brazil leads the BRIC.

May 11 05:44 PM

[Gyoza Mimi:]

Soros is not the best indicator for any type of investments.

Aside from the famous "Black Friday" bet, most of his gains (unlike Buffet, for example) don't come from prudent, long-term investments in existing companies using long-term analysis and strategy. As it was famously stated, no one really knows where Soros'es money is coming from, but much of it is from overseas. Coincidentally, many of his profitable enterprises are located in the areas where he sponsors numerous NGOs and endorses/openly pays government officials.

Knowing that, I personally, would not go to Mr. Soros for an investment advice. Nor I would use him as a proxy for economic situation. However, in case I needed to influence 3rd world country's government into adjusting laws to allow me taking over a gold mine, or blocking similar attempts of my competition, then I will definitely seek his suggestions.

May 11 05:52 PM

[Yoon Kim:]

soros has negative bias, but he does know his stuff....after all he has enough capital to buy the best and the brightest if he wishes.

His fault like many good investors lies in that he is too early in many macro calls and can't sustain the irrationality of the market. I think he forgets to add impact of irrational government intervention (aka. politics) to the economic equations.

Soros does not have enough capital (unlike Goldman Sachs mafia) to buy the best and the most connected in Washington to get the inside info of such interventions.

May 11 06:18 PM

[alajac:]

Buffett had the right fixed idea at the right time. In other words, he was a blind squirrel that found a big nut. His day is done unless he learns to trade...like a George Soros, maybe.

On the other hand, Soros may be good at trading, but his macro-analysis will soon prove to leave quite a bit to be desired. But no more that any of the other idiots.

See the plan on the "alajac" page at u4prez.com for what we need to do to get out of this mess. (it has something to do with a "taxpayer bailout"...and ending the IRS...and defining "government"...and making sure there are no more homeless vets, just to start)

May 11 06:33 PM

[Yoon Kim:]

You mean we could have just used Soros to use bribes and NGOs to get Iraqi crude contracts instead of billions of dollars in war funding to brute force our way in?


On May 11 05:52 PM Gyoza Mimi wrote:

> Coincidentally, many
> of his profitable enterprises are located in the areas where he sponsors
> numerous NGOs and endorses/openly pays government officials.
> in case I needed to influence 3rd world country's government into
> adjusting laws to allow me taking over a gold mine, or blocking similar
> attempts of my competition, then I will definitely seek his suggestions.

May 11 07:02 PM

[Sovestor:]

Somewhat agree. George Soros like to give speech and issue statements or articles to test his current hypothesis and reflexivity theory on the market. If he is wrong, he is quick to acknowledge his mistakes and change his view and trading positions quickly and decisively. He has done this many times with great success.

May 11 07:35 PM

[dcb:]

soros has changed his call often. I remember just a short while ago depression, etc. good article, now I know to take a grain of salt with what he says.

May 11 07:47 PM

[wildfirexx:]

More economists, analysts and financial Gurus like Soros are beginning to predict a positive trend and the substainability for the current markets, which is a change from just a few months back when they were all calling for a short bear market rally and then another leg down to test the new lows...If this is true, many investors missed out on the bull market rally while sitting on the sidelines, waiting for signal that came to late.

May 11 07:50 PM

[Missing_Link:]

Of course he's a contrary indicator.

He's the one driving the whole thing!

Article: "I'm having a very good crisis" says Soros as hedge fund managers make billions off recession:

www.dailymail.co.uk/ne...

He helped fund Obama's campaign, helped trigger the meltdown to ensure an Obama victory last november and put the political winds at Obama's back.

Rahm Emanuel: "You never want a serious crisis to go to waste"

www.youtube.com/watch?...

Hillary Clinton: "Never waste a good crisis"

www.youtube.com/watch?...

Also note the SNL skit starring George Soros which mysteriously disappeared from the internet:

michellemalkin.com/200.../

Noticing a pattern here? Hillary Clinton, Rahm Emanuel, and George Soros seem to have been remarkably well-prepared for this crisis, and positively gleeful that it's happening.

Why do you think that is?

What better way to steer the public in the direction you want them to go than to get Mom and Pop to put all their life savings into the stock market just before you drop-kick the markets and profit financially and politically from doing so?

May 11 07:54 PM

[Harry Tuttle:]

There are no gods. Soros has made and lost a lot of money. How? I doubt anyone really knows. Many hedge fund managers make a lot of money from selling their name (Merriweather comes to mind). He doesn't know what is going to happen anymore than anyone else. In addition, there is no way of knowing what he really thinks.

The same goes for Buffet. Many traders thought it was ok to buy GS at $130 because they, incorrectly, thought Buffet bought at that price (his deal was not in common stock). In any case, he doesn't get everything right, he doesn't always give full information on his trades (would you?) and his investment horizon would not be appropriate for most investors (especially those reading SA).

I heard Barton Biggs, who has been been an investor for decades, say things like: "I am a child of the bull market, I cannot get too bearish," or "Greenspan saved Western Civilization [in 2001-2003]"

These are all fallible people. Many have benefited from a bull market that lasted 25 years and they may or may not be able to adapt to a 60s-like bear market, if we get one.

If you want certainty, I suggest Vegas.

May 11 08:24 PM

[InvestBaboo:]

It amazes me -- you go listen to some guy Soros or Boros or whoever when the charts have told you 100% accurately when a trend began and when it will end. The charts recognized on Macrh 18 the beginning of a trend and the chart reading as of today (May 11th) does not yet show a end to this trend. While you are speculating whether Soros, his cousin Boros, or Buffett is correct I made double digit gains by just listening to Mr. Charts.

May 11 08:38 PM

[doubleguns:]

Cetin says --"Soros is pretty smart, and he's been right since 2002 so it's worth heeding his advice."

Well he was not right in May 2008 and he has changed his opinion on several other occasions.

When you can ring the register with a profit then you are right. Otherwise its just a market turn from evaporation.

May 11 10:47 PM

[doubleguns:]

Cetin says --"Soros is pretty smart, and he's been right since 2002 so it's worth heeding his advice."

Well he was not right in May 2008 and he has changed his opinion on several other occasions.

When you can ring the register with a profit then you are right. Otherwise its just a market turn from evaporation.

May 11 10:47 PM

[Celcius:]

markets are surging!

May 12 12:08 AM

[KIT:]

On May 11 05:17 PM Cetin Hakimoglu wrote:

> He's right. Not only is the stimulus & bailout working just as
> it did in China

Yep........Wrong again........

China’s Export Decline Worsens, Hampering Recovery (Update1)
By Kevin Hamlin

May 12 (Bloomberg) -- China’s export slump worsened in April, making it harder for the government to revive the world’s third-biggest economy.

Overseas sales declined 22.6 percent to $91.94 billion from a year earlier, the official Xinhua News Agency said. Imports fell 23 percent.

May 12 12:28 AM

[Ricard:]

I think you've completely missed the point of this article. What the author is trying to demonstrate is that Soros has been wrong in the recent past, and that there's no guarantee that he is right this time around.

Soros has been calling for a 'rulebook' in what I would surmise are the more speculative instruments that he utilizes. He's been very vocal about being very bearish for nearly 10 years now, and like most bears, he eventually gets it right.

I agree with his 'reverse square root sign' recovery premise, and believe that it will be led by small caps, many of which have been undeservedly decimated by upwards of 90% since late 2007.


On May 11 05:17 PM Cetin Hakimoglu wrote:

> He's right. Not only is the stimulus & bailout working just as
> it did in China, but the dollar is going to fall. Soros is pretty
> smart, and he's been right since 2002 so it's worth heeding his advice.

May 12 01:43 AM

[Yoon Kim:]

Soros nor Buffet can call better shot than you and I when the government changes the rules in the middle of the game to suit their secret desires: pump up the markets, so that stressed financials can raise more reserves by selling inflated stock. As the government's secret mission is played out, insiders like ex-NY Fed Stephen Friedman cashes in for a personal benefit at the cost of the innocent on the other side of the bet.

May 12 05:57 PM

[5142152-337:]

He's a contrarian pure and simple, particularly when it comes to the USA. He's a hater. He's going to do what it takes to make $$$, and, if it can be at the expense of the USA, its a bonus for him!

May 12 09:00 PM

[Yoon Kim:]

Please... Soros is not to blame. The real enemies are (and were for some) the corrupt ones in position of real power. Don't tell me you like Paulson more than Soros.

May 13 02:43 PM