In the world of investing, few names rival that of George Soros. While there are a few people in the world who have acquired more wealth than Soros, there’s nobody who has posted higher returns more consistently over more years. In fact, the only reason that Soros is not the richest man on earth by a very wide margin is the simple fact that he has given away so much of his own personal wealth that he has not had an opportunity to compound it at his established rates of return and learn more about George.
So, how could a man that seemingly had no interest whatsoever in the acquisition of wealth until well into adulthood have posted returns that so thoroughly smash all previous records of those who have come before him? Although there is no doubt that George Soros is a natural genius, there are few concrete reasons as to why he was able to amass such a fantastic fortune and more information click here.
Throughout his college years, Soros attended the London School of Economics, one of the most famous economics schools in the world. There, he studied under famed philosophy professor Karl Popper. The latter had become famous for his seminal work, ‘The Open Society and Its Enemies’, which advocated that all societies should seek to maximize the well-being of all citizens through the use of what may be considered libertarian philosophy.
This rigorous training in philosophical thought gave Soros a serious leg up among his investment peers when he finally did go to work on Wall Street. He was quickly able to identify a number of factors and trends in the way that markets actually perform. Many of these observations that Soros made were at stark odds with the reigning orthodoxy in economic thought. One such idea that had serious currency at the time was the efficient market hypothesis. This was a theory that stated that markets were always able to take all information of all participants into account in pricing assets, therefore arriving at rational pricing and enabling market participants to make rational decisions almost all of the time and follow his Twitter.
But Soros saw the way that markets actually behave as being very different from this purely academic idea. Soros began developing his own theory of how markets function. He would eventually named this theory reflexivity, based on the fact that markets often rely on the behavior of the participants themselves in order to determine what prices will be set for assets. This sort of positive feedback loop creates markets that behave more like the mindless reflexes of an unthinking animal in distress than a cold and rational calculation of an ivory tower economist and George’s lacrosse camp.
At the time, Soros’ ideas were highly controversial. But over 45 years, Soros has been able to return 25 percent per year, making him, perhaps, the greatest investor in history. His ideas have largely been vindicated.