The world economy is slowing down, and commodities driven models are already in trouble. Countries like Brazil and Venezuela are already in recession. Russia is not far away and is preparing for austerity cuts.
The slowdown is triggered by a Chinese attempt to rekindle its economy by adopting a more consumer and service oriented approach to growth. The changes are making it difficult for China to grow, and it has had to resort to desperate measures. It has pumped billions of dollars into the economy and lowered interest rates to record lows.
George Soros is advising investors to be wary of the market and play safe. Soros says on Bloomberg the world should prepare for another meltdown this time led by China. Soros doesn’t expect the Chinese economy to collapse, but the changes are going to upset the balance considerably. It is already feeling the hit with the Shanghai exchange losing $ 2.5 trillion in the last one year.
The current slowdown has been made worse by a fall in the oil prices. This has led to a situation where oil producing countries have started price wars to try to bankrupt other companies. Countries like Saudi Arabia have vast cash reserves and can operate at a loss for many years.
George Soros is a legendary trader with a Midas touch. His name is held in the same regard as William Buffet. He has the distinction of founding and running the world’s most profitable hedge fund in history. Soros Fund Management managed to average 30% returns from 1969 to 2001.It attained a 30.30 ration which is the equivalent of .400 hitters in the equities market.
George Soros has in recent years struggled to find his form and silently retired from the stock exchange in 2011.His firm Quantum fund last year made a 2% return. It makes a disappointing running in the stock market that begun in 2002.
Analysts predict it may be difficult to hit the record ever again thanks to the nature of the market. The market is today filled with highly educated traders armed with high-frequency trading software.
The algorithm in this software is designed to make money in the smallest of market niches.
The change started in 1992 immediately after the fall of the Soviet Union. Its fall slowed the demand for sophisticated weapon systems and highly educated mathematicians and physicists locked in arms manufacturers were suddenly jobless.
The filed to the stock exchange where they brought highly efficient mathematical models that have worked wonders in the market. Today, firms like Soros Management are filed with Ph.D. physicists and rocket scientists running highly complicated trades. Soros this has changed the market forever, and no one knows what direction.