George Soros on Trading

piezoe said:
This is crap. The role in the financial crisis of government incentives, put in place many years earlier, to get banks to lend more in depressed areas, to minority start-ups etc. has been looked at very carefully. It played no significant role whatsoever in the financial crisis. The driving force behind the liar loans and other abuses was demand for mortgages to securitize. Investment banks could not get their hands on new mortgages fast enough to satisfy the demand created by those same banks for CDOs via ratings manipulation. CDOs were, for a time, selling like hotcakes. The popularity of CDOs in turn resulted in a glut of mortgage money. There weren't enough qualified borrowers, so the banks looked the other way as mortgage processors lowered standards to rock bottom to keep raking in fees and supplying mortgages to the banks.

If you want to put the blame on any one individual it's Greenspan, not Frank, you should pinpoint. Greenspan knew about excesses in the mortgage industry, and as chief regulator it was up to him to see that underwriting standards were tightened up. He did nothing. He did not believe in regulation. He thought markets, if left alone, would self-correct more or less harmlessly. He has said publicly that his biggest mistake was believing that Bankers would not act against their own best interests. Apparently Greenspan never got as far in his appraisal of the situation as "too big to fail."
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Piezoe,

Hey there ole buddy. It's been a while.. I do agree with what you are saying. I was at Countrywide (left 2007) right before they went under. And, I saw borrowers wanting more money. On a few occasions, I tried talking customers out of taking the loans. But, they wanted money to pay off their credit cards and buy things they couldn't afford. In their thinking they would come back in a couple of years and do it again. I try not to point the figure on any one person or organization because everyone played a part. As you said.. from the gov "equal housing" to the Fed provisions to the bankers making easy money to investors pushing the paper on secondary markets all the way to the customer. And, I agree. If Greenspan didn't see it or refused to see it.. then how was anyone else to see it. The few that did see it made mad cash during the collapse.

How did we get from Soros to all this? I like to read Soros. It's an interesting perspective. I particularly like how he disagrees with the mainstream ideas that academia pushes on efficient market hypothesis (I'm referring to his ideas on market 'reflexivity'). What are your thoughts?
 
nth said:
Piezoe,

Hey there ole buddy. It's been a while.. I do agree with what you are saying. I was at Countrywide (left 2007) right before they went under. And, I saw borrowers wanting more money. On a few occasions, I tried talking customers out of taking the loans. But, they wanted money to pay off their credit cards and buy things they couldn't afford. In their thinking they would come back in a couple of years and do it again. I try not to point the figure on any one person or organization because everyone played a part. As you said.. from the gov "equal housing" to the Fed provisions to the bankers making easy money to investors pushing the paper on secondary markets all the way to the customer. And, I agree. If Greenspan didn't see it or refused to see it.. then how was anyone else to see it. The few that did see it made mad cash during the collapse.

How did we get from Soros to all this? I like to read Soros. It's an interesting perspective. I particularly like how he disagrees with the mainstream ideas that academia pushes on efficient market hypothesis (I'm referring to his ideas on market 'reflexivity'). What are your thoughts?
More...
Have you read "The Soros lectures at the Central European University"? That little book had a profound affect on my own thinking. (You can also listen to the lectures on You Tube, but I found it much better to read them.) Someone suggested that his reflexivity ideas are just a fancy way of saying there are feed back loops that drive the market to irrational values. While Soros points out the existence of these feed back loops, he develops his ideas much, much further then that. We have all heard the saying, "The Market is always right." Well Soros would say that markets are wrong much, much more than they are right. I don't think there is anything better to read, for both traders and investors than Soros.

P.S. I think Greenspan was very much aware of the problems in the mortgage industry. I have my own theories of why he didn't act. Needless to say, Greenspan and Soros are quite opposite when it comes to their views on markets.
 
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A: I've learned many things from him, but perhaps most significant is that it's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong. The few times that Soros has ever criticized me was when I was really right on the market and didn't maximize the opportunity.


Soros is also the best loss taker I've ever seen. He doesn't care whether he wins or loses on a trade. If a trade doesn't work he's confident enough about his ability to win on other trades that he can easily walk away from the position. There are a lot of shoes on the shelf; wear only the ones that fit. If you're extremely confident, taking a loss doesn't bother you."


Those two things! 'criticized me was when I was really right on the market and didn't maximize the opportunity. ' .. knowing when to go for the jugular ..

And, the second.. well that one comes with time. After either having thoroughly tested.. or having seen the results.. then the confidence is there to know that you will win another trade and the losses are simply part of a numbers game.
 
piezoe said:
This is crap. The role in the financial crisis of government incentives, put in place many years earlier, to get banks to lend more in depressed areas, to minority start-ups etc. has been looked at very carefully. It played no significant role whatsoever in the financial crisis. The driving force behind the liar loans and other abuses was demand for mortgages to securitize. Investment banks could not get their hands on new mortgages fast enough to satisfy the demand created by those same banks for CDOs via ratings manipulation. CDOs were, for a time, selling like hotcakes. The popularity of CDOs in turn resulted in a glut of mortgage money. There weren't enough qualified borrowers, so the banks looked the other way as mortgage processors lowered standards to rock bottom to keep raking in fees and supplying mortgages to the banks.

If you want to put the blame on any one individual it's Greenspan, not Frank, you should pinpoint. Greenspan knew about excesses in the mortgage industry, and as chief regulator it was up to him to see that underwriting standards were tightened up. He did nothing. He did not believe in regulation. He thought markets, if left alone, would self-correct more or less harmlessly. He has said publicly that his biggest mistake was believing that Bankers would not act against their own best interests. Apparently Greenspan never got as far in his appraisal of the situation as "too big to fail."
More...
communities.washingtontimes.com/neighborhood/prudent-man/2011/nov/29/barney-frank-flees-scene-his-fiscal-crimes/ Open your eyes... the politicians and their desire to get as much funding as possible... to get the votes they need to stay in power... is the root of most of our problems! Fannie and Freddie donated hundreds of millions to leftist groups for get- the- vote out efforts! That's why Frank let both entities get so overleveraged...more money for the democrats. Quit looking at the greedy people at the bottom...it all starts at the top.
 
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BONECRUSHER said:
communities.washingtontimes.com/neighborhood/prudent-man/2011/nov/29/barney-frank-flees-scene-his-fiscal-crimes/ Open your eyes... the politicians and their desire to get as much funding as possible... to get the votes they need to stay in power... is the root of most of our problems! Fannie and Freddie donated hundreds of millions to leftist groups for get- the- vote out efforts! That's why Frank let both entities get so overleveraged...more money for the democrats. Quit looking at the greedy people at the bottom...it all starts at the top.
More...
Yours is a viewpoint I don't share. I believe you have mingled together several entirely different issues.
 
Here's a good one:

“To others, being wrong is a source of shame; to me, recognizing my mistakes is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes.” - George Soros
 
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