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Ravee Mehta
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Ravee is the founder and portfolio manager of Nishkama Capital LLC. Previously, He worked for 2 multibillion dollar funds for over 11 years. He was a managing director at Karsch Capital and was an analyst at Soros Fund Management, where he followed the technology sector. Prior to Soros, Ravee... More
My blog:
The Emotionally Intelligent Investor
My book:
The Emotionally Intelligent Investor: How Self-Awareness, Empathy and Intuition Drive Performance
  • Buffett Versus Soros 0 comments
    Sep 13, 2012 12:39 PM

    Warren Buffett and George Soros are both great investors, but they are different in almost every respect. Soros is impulsive while Buffett is conscientious. Soros is a philosopher while Buffett is a practical Midwesterner. Soros is more emotionally sensitive than Buffett. Soros knows that losses can impair his judgment, whereas Buffett knows that one of his strengths is to be "greedy when others are fearful." Their success comes from the main thing they both have in common - high self-awareness. They are both introspective enough to have adopted investment approaches that fit perfectly with their personality traits, motivations and weaknesses. Warren Buffett is a legend. However, if George Soros tried to be like Buffett, he would very likely have been a failure.

    Soros is a trader while Buffett is a long term investor that looks for investments he can hold forever. Investment horizon is a by-product of motivation. Buffett enjoys learning how businesses operate and loves finding new businesses with sustainable competitive advantages. He likes to be a long term partner with management. On the other hand, Soros' motivation is derived from his love of philosophy. He views investing as a means for testing his theories.[i] Therefore, Soros does not necessarily have an investment time horizon. If he realizes he is incorrect, he may reverse his position the day after it is initiated. At the same time, Soros could be in the same investment for years, as long as his theory concerning it still proves valid. Buffett has a lower tolerance for ambiguity than Soros. While Buffett walks away from any business he does not understand, Soros views uncertainty as part of the opportunity. Both investors are excellent in avoiding overconfidence, but they do so in different ways. Buffett utilizes a partner, maintains a humble lifestyle and is relatively even-keeled emotionally. Soros is constantly on the lookout for the flaws in his thesis and is highly open to the ideas of others. While his mood and emotions seem to fluctuate much more than Buffett's, Soros uses his relatively high self-awareness regarding his emotional and even physical states to his advantage. He sometimes changes his views at the onset of acute back pain, for example.

    Like Buffett and Soros, we each need to tailor our investment style to fit our own personal attributes and tendencies.

    If you liked this post, you will probably like my book "The Emotionally Intelligent Investor: How Self-Awareness, Empathy and Intuition Drive Performance" available at http://www.amazon.com/The-Emotionally-Intelligent-Investor-self-awareness/dp/0615688322


    [i] Richard L. Peterson, Market Psych: How to Manage Fear and Build Your Investor Identity (Wiley, 2010).

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Opinions are my own. I have not contacted Warren Buffett or George Soros (or any of their representatives) for this article.

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