Legendary investor, George Soros throws the towel in betting against the Trump Trade (defined as a surge in US stocks due to Congress making pro-growth initiatives). George Soros has been trumped by the Trump Trade.
Past performance is no guarantee of future performance, indeed 2017 has been a year where many legendary investors and established money managers are not coming up trumps, they too have been trumped by the Trump Trade.
Bond king Bill Gross did just OK in 2017. Rothchilds RIT Capital Partners Funds cautious approach and aversion to risk also meant that it most likely underperformed this year (RITs December final year report soon out should confirm this). Warren Buffet’s Berkshire Hathaway fund also delivered sub-par results for investors.
The classic value investor is struggling to grasp intrinsic value in the digital age.
“Billionaire George Soros lost nearly $1 billion in weeks after Trump election”
But it is the legendary investors, world’s top billionaire currency speculator, George Soros, dubbed “the man who broke the Bank of England” who bet against the GBP in the 90s and made a fortune has not been so lucky this time around.
George Soros bearish bets on the Dow has lost the billionaire speculator a fortune. No one more than George Soros has been trumped by the Trump Trade (and it is not just the $10.6 million he contributed to the campaign of Trump’s opponent, Hillary Clinton, according to the Center for Responsive Politics).
Indeed, billionaire George Soros lost nearly $1 billion in weeks after Trump election which resulted in the Dow Jones Industrial Average climbing about 9% just two months after a Trump win.
A Trump administration should have been the catalyst for a stock market crash, as many experts forecasted. So George Soros (the doom profiter) bet aggressively against the Dow.
George Soros also snaked back into the market by what he perceived to be doom opportunities within the European Union, so he bet to profit from the collapse of the single bloc currency, the euro.
George Soros also sought to profit from economic troubles he was anticipating in China.
George Soros added to his bearish position, a trend he began back in 2016 betting against the market. It was a bad play, bearing in mind the Dow beating 86 new record highs since 2016
But the legendary doom speculator, George Soros devilish bet this time has been burned in hell. By far George Soros biggest loss in 2017 was betting against the Dow.
Judging by his moves in the fourth quarter, the head of Soros Fund Management and leading donor to progressive and Democratic causes believed the small- and large-cap stocks were in trouble.
Whats more, when US stocks kept rising George Soros doubled down on his bet. The hedge fund manager and active supporter of progressive causes added bearish options plays to his portfolio during the first quarter of 2017, according to filings.
His two primary plays — against large caps via the S&P 500 and small caps via the Russell 2000 — have a notional, or potential, value of $764.3 million, according to an analysis from S&P Global Market Intelligence.
So George Soros added to his bearish position, a trend he began back in 2016 betting against the market. It was a bad play, bearing in mind the Dow beating 86 new record highs since 2016.
Soros’ bets against stocks came in the form of puts, or options to sell, on two exchange-traded funds that track broad market indexes.
The fact that George Soros has been trumped by the Trump Trade is probably the most underreported news in mainstream media. Just how much George Soros’ fund lost has not been disclosed but some simple maths scribbled on the back of a paper napkin (assuming his two plays have blown up) and you’ll calculate that George Soros has been trumped by the Trump Trade to the tune of well over $1 Billion.
When US stocks kept rising George Soros doubled down on his bet
Could the Trump trade payoff in 2018?
Trump is a maverick. What we can learn from Soros’ huge loss is don’t underestimate this current US president.
Mainstream media likes to portray Trump as a bubbling idiot but a stupid billionaire is an oxymoron (a wealth builder can’t be stupid).
Let’s assume this billionaire president knows what makes the world tick. High (corporate) taxation, (the status quo) creates ghettos.
Super rich ghettos; Monaco has to build into the Mediterranean Sea to house the super-rich as trillions of dollars are squirreled away in off-shore tax havens. That bleeds the onshore economy of capital.
When the super-rich wealth creators abandon the region (country) where they created the wealth to dodge high taxation it deprives the economy of capital investment and it creates another type of ghetto; poor ghettos. US inner-city children suffer war zone trauma.
But capital is free to go where it wants to go. So by slashing corporation taxes, by dangling the carrots and making it more attractive to invest at home that is likely to repatriate a trillion dollars of corporate capital to the US. So the Trump administration favors trickle-down economics to public social spending.
The negative divergence between stocks prices and economic fundamentals will continue to widen along with social economic inequality – eventual something will snap
Will it work?
Trickle-down economics, in its pure form, was never tested. We will have to wait and see.
If the repatriated capital continues to flow into speculative investments, like corporate stock buybacks not much will change. In other words, the negative divergence between stocks prices and economic fundamentals will continue to widen along with social economic inequality – eventual something will snap.
However, if we see a boom in productive investments (CAPEX spending) then the Trump trade has got legs. Construction companies are upbeat believing that they now have one of their own in the White House.
So if activity picks up in US housebuilding, mining, coal, oil, infrastructure projects, manufacturing that means jobs which is what trickle-down economics is all about.
Investors are already making moves to prevent being trumped by the Trump Trade, they have yanked billions out of the market, following Trump’s tax bill win.
Bond funds saw their biggest outflows in a year, with high-yield funds losing $5.3 billion in the eighth week of losses. Some strategist believes that this underscores a bullish trade for January 2018.
With George Soros trumped by the Trump Trade and capitulating shorting the Dow will other top investors follow suit?
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.