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Quantum Leap

Soros’ investment story dates back to 1970, when he co-established the Quantum Fund with Jim Rogers, another accomplished trader. Rogers would go on to be a world famous investor as well. The Quantum Fund was a private company that would, over the next decade, create the bulk of his fortune.
To say its performance has been stellar is an understatement. If $1,000 was invested with Soros in 1969 it would be worth nearly $6 million today. Compare that to a $1,000 investment in the Standard & Poor’s Index in 1969, which would be worth a little more than $34,000 today.
In fact, with a compounded annual rate of return in excess of 28 percent, the Quantum Fund makes Soros known as the most powerful and profitable investor in the world.
While Soros’ rise to wealth—an estimated $11 billion by the mid-eighties—was relatively steady, it wasn’t without its challenges. In 1988, Soros was asked to join a takeover attempt of a French bank. He declined, but did buy the bank’s stock, later claiming the takeover was public knowledge. The French court didn’t buy it. And, in 2002, it accused him of insider trading. He was fined $2.3 million and appealed the conviction, but in June 2006 it was upheld by France’s highest court.
Still, the incident didn’t stop him from betting against the British pound in 1992, hastening its devaluation. It was another defining moment for Soros, since it marked the making of his first billion—and instant fame.
Since then, Soros has greatly leveraged his fortune as a shrewd investor, a trend spotter, and a savvy manager. In addition to managing the Quantum Fund, now valued at $12 billion, and acting as President of Soros Fund Management, valued at $2.72 billion, he is also a renowned author, philanthropist, political activist, speculator, investor and overall financier.
He’s also a man who draws great criticism for claiming that the current system of economic globalization undermines healthy development in many underdeveloped countries.
Still, his critics have accused him of being personally responsible for many financial debacles, including the British collapse. Soros, however, is nonplussed. He continues to work on furthering his own economic self interests and lobbying for an overhaul of the global financial system simultaneously. “As a market participant,” he’s said, “I don’t need to be concerned with the consequences of my financial actions.”
Soros: Global Slowdown in 2007?
As a self-proclaimed “investment philosopher” and global investor, Soros does have some interesting views of late on the U.S. economy – and the direction it’s headed. In the short-term at least, it’s not a bullish view.
At this year’s World Economic Forum in Davos, Switzerland, billionaire financier George Soros was reflecting on the U.S. dollar and the future of the American economy, among other issues.*
*On the U.S. dollar:
"The explanation is very simple. The U.S. economy was strong because of the housing market, which made up for the price of energy. Interest rates were rising so interest rate differentials were widening and they still look like widening further. When you reach the point where interest rates might be turning around, then the dollar might become more vulnerable."
* On the U.S. and world economy:
"As the housing boom cools off, the wealth effect wears off and the consumers are going to start saving a little more than they did in the past. And that will give you the slowdown in the U.S. economy, which I think will actually be transmitted to the rest of the economy so that's why I expect a global slowdown in '07."
* On hedge funds growing bearish:
"Hedge funds are in my view a superior form of managing money, but it has become generally recognized. When hedge funds become the dominant force in the market then they can't outperform the market. So it's kind of a self-correcting process. Hedge funds have become a little too popular. I think that a lot of hedge funds managed to tie up capital for quite some time, so it may be more difficult to set up a new hedge fund. And I think probably the fee structure will weaken."
*Source: Bloomberg News
Published Sep 22 2006, 08:27 PM by moneycoach
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