Does he prove that a speculator can be successful?
He proves that anybody who invests just like Soros can be successful, unfortunately nobody knows how to invest just like Soros.
The term ‘value investor’ certainly don’t apply to someone who moves markets, such as when he broke the back of the Bank of England.
From what I have read on his arbitrage plays, the term speculator is not very appropriate. His moves were calculated and based on economics and not because some chart has moved above their moving average or that the candle is burning someone’s butt.
Well, I suppose the difference between a speculator and an investor in this sort of stuff is that the investor has a reason to think that they are buying value, whereas the speculator is betting on a hunch. My guess is that there is a kind of continuum between “hunch” and “value based decision making” which is based on whether you think the methodology used is sound or not. If you do a statistically based strategy where 40% of your bets pay off and 60% don’t (but the 40% that do pay well enough to average out to a positive return), are you investing or speculating with any specific decision to invest?
i try not to get into the semantics. To me, a speculator is one that thinks things “should” happen. an investor thinks things should happen based on some prespecified frame of logic. According to Hume, we’re all speculators.
I have to disagree with the above. A speculator has a stigma of being a gambler. Nothing could be further from truth. Yes, there are gamblers in the markets, but a true speculator, i.e., Livermore, reads the tape, watches the movements of price, looks at the fundamentals/indicators, and takes a calculated (seemingly higher than not) probability position on the market for the short to intermediate term. Traders are those who take positions from minutes to days to weeks. A speculator takes positions lasting from weeks to months. And an investor takes a position lasting from months to years. One is not better than the other, just different strategies and analysis required.
or a market manipulator, who finds weakness, creates chaos and then attacks targets? Is this way a better way than value investing? What’s the difference between Buffett and Soros? I guess Soros’ way is most exciting for most people if they have enough financial power.
Soros takes a view or plays with the macroeconomic variables. He explains a bit of his method in his books.
I don’t think Soros is a value investor in the Graham/Buffet sense. But to call him a speculator suggests that he is just gambling without a reliable methodology behind his bets, and that seems too harsh. I’ve come to think that most Global Macro guys are really more like traders than investors. Traders don’t necessarily look at intrinsic value the way value investors and the CFA priesthood advocate, but it’s still not quite like gambling. In gambling, there’s a difference between playing something like Roulette and something like Blackjack. In Roulette, you have a negative expectation game (the house makes 1%/bet on average), and there’s not much you can do about it. In Blackjack, there are times (when the low cards have been used up faster than the high ones, I think), where you have a small advantage over the house, and this is when you should start making big bets. Blackjack isn’t exactly investing, but there is a smart way to play it. Roulette is more pure gambling, so it’s just fun when you win. (I’ve never had the patience to make money at Blackjack, though; and for some reason, I’ve often done quite well at Roulette). Another interesting observation about Roulette and Blackjack. Roulette is really more like a random walk, in that each number is (supposedly) uncorrelated with the numbers that go before it, so a cumulative earnings graph would be a random walk with a negative drift. Blackjack, however, is a game where your expectation depends on the cards that appeared in the recent past (with an occasional regime shift/reset when the dealer shuffles the deck).
I’m a Grahm guy. You’re either investing or speculating and you better know the difference if you want to make(keep) money. Soros does well (understatement), but last time I checked Buffet was worth about 30 billion more than him. I love it when ppl at the casino see that red came up 10 times in a row so they think black is “due” to hit next. Or how about, the odds are 50/50 for it being red/black. Nope, try again pal.
Dapper425 Wrote: ------------------------------------------------------- > I’m a Grahm guy. You’re either investing or > speculating and you better know the difference if > you want to make(keep) money. Soros does well > (understatement), but last time I checked Buffet > was worth about 30 billion more than him. What is RenTec doing? Investing or speculating?
i believe in graham too. this is why i hate TA and they hate me.
Here’s an interesting brain teaser about TA. 1) One of the reasons that TA shouldn’t work is that if it did, everyone would use it, and any possible profits from TA would be arbitraged away, since the same price histories are basically available to all actors. Therefore, intelligent investors would use TA to reap extraordinary profits until those profits disappeared. Therefore technical analysis doesn’t work because - if it did, everyone would use it. 2) One of the reasons that TA might work is that if enough people believe in price support and resistance levels (and the power of moving averages, etc.), then the very fact that they act on price signals to buy makes these price signals more powerful. Therefore technical analysis may work simply because people use it. Hmmm… which one is it?
bchad, TA works in short spurts. But the underlying foundation in stocks relies on dividends, so this will always bring a stock’s price back in line in the long run. the self fullfilling prophecy from TA cannot go on forever as a result of this underlying fundamental of earnigns. I’m beginning to think that a person with tremendous TA skills and fundamental understanding will benefit significantly. you can use TA as a means to understand how markets clear. after all, fluctuation around the stocks “long term” mean is what TA is all about. but once you understand the fundamentals, you will be able to pick the stocks that aren’t fluctuating around the right equilibrium and profit form those that do. to me, TA is the study of how markets clear, though not a very solid or scientific one, just a practical one. therefore, i think the answer to your question is not so much, “which one”, but more so, “when”. I will say though, a person with pure TA skill is simply a speculator. the convos that i have had with TAs were ridiculous, but that has a lot to do with where i work.