The Ideas of George Soros
George Soros holds the viewpoint that the stock market is unpredictable and operates on laws of irrational behavior. In a Fool.com article, the philosophy of George Soros seemed to have played out as the stock market shifted in 2015. The market got off to a decent start during the first half of 2015, but with increasing threats from ISIL, crashing oil prices, and political uncertainty, the second part of 2015 saw the market’s mood swing wildly. The S&P 500 ended the year essentially flat.
Why Listen to George Soros
George Soros achieved an extremely high level of success as an investor in the stock market, which is why his ideas hold so much weight with current investors. He was head of the Quantum Fund with tenure, and during this time, he achieved yearly returns for investors in excess of 30%. He holds a reputation as one of the best hedge fund managers to have ever existed, and he has been thought of as second to only Warren Buffett. He also makes a strong point in that what should happen in the market rarely works out as expected.
Evidence to Support Claims
Recent happenings in biotech stocks support the philosophy of George Soros. In 2010, analysts and pundits deemed biotech stocks in general as dangerous, but the great success of iShares Nasdaq Biotech ETF contradicts this prediction of danger. This biotech stock grew 307% from the beginning of 2010 through the end of 2015. Another example of the market’s erratic nature is seen in the low performance of Gilead Sciences. Gilead should have been top-performing in 2015 based on a projected growth rate of 30%, but the stock ended up growing a mere 9.2%. Cancer drugmaker Exelixis started out with a weak overall financial outlook, but it outperformed Gilead with a gain of over 240%.
What Should Investors Do in 2016
As a bottom line according to George Soros, investors should not bother with trying to predict the market when it behaves erratically. Instead, they should prepare to take advantage of dips in the market and stay invested in case the market changes its trajectory in 2016.