We all have a habit of putting all these “legendary investors” on a pedestal without actually knowing the details of how they do things. George Soros is one trader who people view as a God in the business, someone to look up to and try to emulate. His fund generated 30% annual returns, he is also known for making $1-billion dollars on a single trade, a trade in which they were risking $10-billion. These things sound awesome, what we don’t know is the details, one which is that some of Soros trades almost bankrupted the fund, and how by October 1987 the fund was up 60% year to date and a week later the fund was down 10% year to date.

“To add insult to injury, after two days of gains on Thursday, October 22, US indexes declined and Soros tried to book gains. Once again the Quantum Fund’s mammoth futures position worked against it. Noting that there was a large seller in the market, traders across Wall Street intensified their selling of US futures. Once again the Quantum Fund was stuck. By the end of the week, the Quantum Fund was sitting on losses of 10%, not 10% on the week, 10% year-to-date. In five trading days, the fund had been gone from being up 60% on the year to being down by 10%, a loss of $840 million.”

You need to know all the details before you try to emulate someone else. 

Read the whole story here.

Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at fzorrilla@zorcapital.com or 646-480-7463. 

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