Associated Press
- The billionaire investor George Soros is known for making a series of predictions across topics as diverse as social-media networks, the Chinese economy, and Iranian politics.
- Markets Insider examined eight of Soros’ predictions, as well as the outcomes.
- Visit MarketsInsider.com for more stories.
The billionaire investor George Soros is not shy about making predictions, in financial markets or otherwise.
Soros is an investor of almost mythical status, having accumulated a fortune of nearly $40 billion from trading across currency, equity, and fixed-income markets. He started the Quantum Fund in 1973 before returning all outside capital in 2011 to focus solely on managing his own money.
Soros also has a great interest in politics, having donated the majority of his fortune to the Open Society Foundations, which he establish to promote democracy and human rights across the world.
“Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes,” from “Soros on Soros: Staying Ahead of the Curve.”
Markets Insider highlights eight of Soros’ predictions – and their outcomes – below:
Democrats will win 2018 in a ‘landslide’
Associated Press
Date: January 2018
Prediction: Soros predicted a major win for the Democrats in the 2018 elections.
“I give President Trump credit for motivating his core supporters brilliantly, but for every core supporter, he has created a greater number of core opponents who are equally strongly motivated,” said the investor at the World Economic Forum.
“That is why I expect a Democratic landslide in 2018.”
Outcome: Kind of correct.
The Democrats took back control of the House, gaining 41 seats.
Nancy Pelosi reclaimed the title of Speaker of the House, but the Republicans maintained control of the Senate, picking up two seats.
Soros also predicted that Trump would not be re-elected in 2020, which remains to be seen.
Source: georgesoros.com
Bitcoin is a bubble
Reuters
Date: January 2018
Prediction: Soros slammed cryptocurrencies as bubbles and derided bitcoin in particular.
“Cryptocurrency is a misnomer and is a typical bubble, which is always based on some kind of misunderstanding,” Soros said.
“Bitcoin is not a currency because a currency is supposed to be a stable store of value and the currency that can fluctuate 25% in a day can’t be used for instance to pay wages because wages drop by 25% in a day. It’s a speculation. Based on a misunderstanding.”
Outcome: Correct.
Bitcoin plunged 70% to a low of $3,136 in December 2018. It has since made somewhat of a recovery, more than doubling off its low, and now trades just below $8,000.
Source: Forbes
The ‘days are numbered’ for Google and Facebook
Reuters
Date: January 2018
Prediction: Facebook and Google will face a reckoning.
“Facebook and Google effectively control over half of all Internet advertising revenue,” the 87-year-old told diners during a speech.
“They claim that they are merely distributors of information. The fact that they are near-monopoly distributors makes them public utilities and should subject them to more stringent regulations, aimed at preserving competition, innovation, and fair and open universal access.”
Outcome: Somewhat correct.
While both Facebook and Google still exist, both companies have come under severe pressure for privacy concerns related to their business models.
Facebook, in particular, has come under attacks from Congress for the way it was used as part of Russia’s interference in the 2016 presidential election.
The company’s stock fell nearly 44% from its July 2018 high before recovering in 2019.
Source: georgesoros.com
The next financial crisis will be in Europe
Reuters
Date: May 2018
Prediction: Europe is at risk of another major financial crisis.
“We may be heading for another major financial crisis,” said Soros. “It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality.”
He added: “The euro has many unresolved problems and they must not be allowed to destroy the European Union.”
Outcome: Incorrect (at least so far).
European financial markets appear subdued with Italian 10-year yields at 2.7%, only slightly higher than the US 10-year yield of 2.4%.
Source: Bloomberg
Argentina will pay back its debts
Quique Kierszenbaum/Getty Images
Date: August 2016
Prediction: Argentina would pay off its 2001 defaulted debt.
A lawsuit filing revealed that Quantum Partners, controlled by Soros’ family office, held a position in defaulted Argentine government bonds. The defaulted debt, from 2001, was also held by billionaire and rival hedge-fund manager Paul Singer.
Outcome: Correct.
The hedge-fund investors ultimately realized a stunning return on their investments, with Singer’s hedge fund, Elliot Management, reportedly pocketing over $2 billion in profits.
Soros’ position was not fully disclosed.
Source: Bloomberg
The next financial crisis will be in China
AP Photo/Andy Wong
Date: April 2016
Prediction: China financial crisis
China “eerily resembles what happened during the financial crisis in the U.S. in 2007-08, which was similarly fueled by credit growth,” Soros said at the Asia Society.
“Most of the money that banks are supplying is needed to keep bad debts and loss-making enterprises alive.”
Outcome: Incorrect (at least so far).
China’s economy has slowed notably in 2018 and 2019, weighing on financial markets. However, there do not appear to be signs of a US-style crisis despite high corporate-debt levels.
Source: IndustryWeek
Iran will undergo a ‘regime change’
Photo credit should read -/AFP/Getty Images
Date: February 2012
Prediction: Iran’s present regime is not going to last the year.
Outcome: Correct.
Hardline President Mahmoud Ahmadinejad was voted out of office in the 2012 elections as reformist Hassan Rouhani took over the presidency.
However, it was not a total regime change as Ayatollah Khamenei, in office since 1989, maintained his role as supreme leader.
Source: Tiger21.com
The British Government will devalue the pound
UK
Date: September 1992
Prediction:
The British government would be forced to dropped out of the European Exchange Rate mechanism and devalue the pound, creating a windfall of profits for those short the currency.
Outcome: Correct (and potentially caused by his actions).
Despite hiking interest rates as high as 10% to squeeze short-sellers, the British government was forced to devalue the pound on September 16, 1992.
This was the same day Soros increased his short pound position from $1.5 billion to $10 billion. “We must have been the biggest single factor in the market in the days before the E.R.M. fell apart,” The Times of London quoted Mr. Soros as saying.
“A billion is about right as an estimate of the profit, though dollars, not pounds,” Soros said. The profits were attributable to funds managed by Soros and not his personal gain, as reported by the New York Times.
Source: NYTimes
