Tuesday's Great Debate: Soros, Buffett, and Models
The Black Swan author Nassim Taleb was in Canada last week for the Salon Speakers series and was asked by an audience member; if given a choice between investing with Buffett and billionaire investor George Soros, who would he pick?
The former prop trader said he would probably pick Soros, and argued that:
“I am not saying Buffett isn’t as good as Soros,” he said. “I am saying that the probability Soros’s returns come from randomness is much smaller because he did almost everything: he bought currencies, he sold currencies, and he did arbitrages. He made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile and it worked for him. There is a lot more luck involved in this strategy.”
James Picerno wrote an interesting article on it and using Alpha and Beta, tried to quantify which of the two has truly added value to their funds.
He didn’t get an answer, so I’m passing the ball to you; who do YOU think is the better investor?
| George Soros | Warren Buffett | |
|---|---|---|
| Age: | 80 | 80 |
| Education: | LSE | Columbia | Nickname: | The Man who Broke the Bank of England | The Oracle of Omaha |
| Years investing: | (Quantum Fund)38 | (Berkshire Hathaway)40 | Investment Style: | Global Macro | Value/Growth Hybrid |
| Rough Annualized Returns: | 32% | 20.3% |
| Net Worth: | $14.2 Billion | $45 Billion |
| Diet: | Russian 20-somethings | Cheeseburgers & Cherry Cokes |
| Contradictory Behavior: | Socialist streak | closet CDS lover |
So pick a side, the Hungarian macro titan or Mr. Market's best friend? Or at the very least, who’d you rather emulate?
And if you had their skills and money...
| Miranda Kerr | Alessandra Ambrosio | |
|---|---|---|
| Age: | 27 | 29 |
| Height: | 5'9" | 5'9" | Measurements: | 32-24-34 | 34-35-34.5 |
| Eyes: | Blue | Brown |
| Nationality: | Australian | Brazilian |
| Jorge's Rating: | AAA+ | AAA+ |
I'll take Georgie for skill, since coming out of retirement the man's been raking in a lot for himself and Quantum, not bad an 80 year old.
And then I choose Alessandra, for sharing to the world Brazil's hatred of normal-sized bikinis and because we'd all kill to know if she can backup that f-me look.
How bout you?
On one corner is an international man with a Philosophy PhD who dealt with complicated arbritage strategies and is known for his deep political musings. And on the other corner is a hardworking American accountant who had a sensible and straightforward investment style and stuck through it for the long haul. One is definitely more intelligent than the other (Buffett has so much as said so himself). Now, I would prefer to call Buffett the investor and Soros the trader as I see them as two very different animals. But if the question is simply which one, and only one, would I invest money with today under the notion of a more complex/dangerous/uncertain financial landscape- then I would have to say Soros. But that doesn't mean I don't have as much respect for Buffett's accomplishment as I do Soros'.
Ugh, I enjoyed Taleb's "Fooled by Randomness," and "Black Swan," but I'm going to have to disagree with his choice on Soros.
“I am not saying Buffett isn’t as good as Soros,” he said. “I am saying that the probability Soros’s returns come from randomness is much smaller because he did almost everything: he bought currencies, he sold currencies, and he did arbitrages. He made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile and it worked for him. There is a lot more luck involved in this strategy.”
I'm not really too satisfied with this explanation, it's a little contradictory and flawed. I would like to hear what Buffett would say in response. Anyway, Buffett said if he had only a million dollars to invest, he could "guarantee" a 50% annual return. Now, Buffett is no intellectual lightweight to use the word guarantee lightly. So I suppose my answer to the question would be 1) what kind of financial environment are we in and 2) how much money would be invested.
For the sake of argument let's say
1) today's environment, but after all the shit happens let's assume a long bull market will follow.
2) you have 5 million gathering dust on the corner which you won't mind missing for 20 years
and
Let's assume they'll be in absolutely perfect shape and mind for the next 30 years.
I wasn't really eloquent on my I chose Soros, but before I go on I'd like to point out the cons of investing with him:
He has lost way more money than Buffet, if memory serves I think he even lost a billion in a single day during the Russia thing. Buffett on the other hand closed shop before any losses could occur during the (tech?) bubble
Soros supposedly has a bad batting average, he just wins big when he does. Buffett of course is exactly the opposite.
Now on why I chose him:
Investing with him doesn't just mean you invest with him alone, part of your money could be in Kynikos/Tudor/wherever. Well, at least in the past that was the case, I'm not sure now but if that's still so I feel that my money would be safer.
He may have lost big money but he has killed it on every other crisis/bull/bear market.
Why I didn't choose Buffett:
Like Seigniorage I have massive respect for the man but personally I'm just not that confident in his skills anymore. He's been straying from his tried and true methods and it's been killing BRK.
New Yorker, totally agree-how is making huge directional bets with currency and interest rate derivatives "less random" than buying fundamentally strong businesses? Not saying on method is "better" or one investor is "better" but if a few big trades go against Soros, he's just some other macro-hedge fund billionaire (We should all be so lucky).
It'd be interesting to compare some other metrics-Sharpe ratios, max drawdowns, etc. Also in Soros' favor, Buffett's returns (I believe) are based on shares of BRK, so his returns aren't solely investment gains.
I think it's pretty difficult to make a case for "luck" in either case. I would also go with Soros simply because he has the varied background and international knowledge that, in my opinion, would better take advantage of a turbulant market. But again, the idea that either of these guys use any kind of luck (other than the random, implied luck that all of us get a little piece of from time to time) seems a bit silly. Returns of 20+ percent over decades has VERY little to do with luck.
Both are crooks and/or lucky. Seriously I am so sick of the buffet/soros adoration that goes on. Buffet bought stocks before the biggest bull market in history. He also gets his friends in the treasury to bail him out when his short naked puts get close to the money lol. Mr Soros uses inside info and manipulates the mkt. Both talk their book on CNBS which is elite pump and dump. There are other billionaire traders you know. Why are they not given the same attention? Because (according to Forbes flawed methodology of discovering net worth) they are worth slightly less.
Soros gets too much credit for Druckenmiller's genius.
Rogers>Soros.
Totally agree, especially with breaking of the pound. Soros was the guy in the sidelines not the other way around.
Northeast1: your comments are quite inane.
Jorge: Buffet didn't close shop in the tech bubble, he just choose not to invest in tech stocks even though he was facing severe criticism. What he did close was his partnership in the 60's I believe.
I am confident that if i gave Buffett my money he could get a better return on 5 million in 5 years than Soros could. I definitely don't think Buffett has strayed away or lost his skills. I think his investment in BYD is an example of his adaptability.
*I've read every of Buffett's letters to shareholder's from 1978 to present, including his partnership letters, "Snowball," "Security Analysis," Intelligent Investor," "Making of an American Capitalist," and "Poor Charlie's Almanack," so I kind of know a little bit about Buffett. On the other hand, I don't know to much about Soros, although I have read the "Alchemy of Finance" and "The Age of Fallibility," and i think his theory on reflexivity is very acute.
Ambrosio
Yea no shit, nobody is even noticing the gals haha. Both are equally dope but I'll take Kerr just cause I'm a sucker for Australian accents.
I like Taleb, but he is a little to conceited for my tastes.
I would go with Buffet. He sticks to a simple investment strategy and stays true to it. Real easy to get caught up in shit.
Going to meet him in a month!!!! Yay!!
Taleb is the man of the hour I suppose, but I doubt this will be the case 10 years from now. Warren has been the man of the hour many a time.
“We are chimpanzees with no memory,” Ken Fisher.
Soros is a gambler with someone elses checkbook. He is the Donald Trump of hedgefund managers and does not deserve the credit he gets.
That's way too harsh. Sure he owes a lot of his success to Rogers, Druckenmiller, Roditi and all, but still, he's been killing it for a long time and has never gone bankrupt like Trump. Good luck asking Trump to write "The Alchemy of Real Estate" as well.
I gotta go off the grid with both. The first is Peter Lynch for doing much more with much less in a much more constrained environment. While I greatly respect Soros and Buffett, Lynch was limited to the guidelines set forth by rules governing mutual funds, so he couldn't break the Bank of England or make massive private investments and buy out companies on a whim. Given his guidelines, making an average of 29.2% a year for 13 years ('77 to '90, when he ran Fidelity's Magellan Fund) is impressive enough to consider him having found and added more value for the fund he worked for despite not being as "Well Known" as the two.
As to the women, while I love Miranda Kerr and find Alessandra Ambrosio to be smokin', I need to cast my vote with another write in, Bar Rafaeli. I'll take the Israeli bombshell any day of the week.
For any girl I'll go with Cheryl Cole or Megan Fox
it seems that everyone assumption of buffet as a longterm term value investor is oversimplified. I know that is the image which he projects to the public, but the reality of what he does is more complicated, with buyouts and derivatives and the like.
I'd go with maria ozawa. but she'd have to improve her english and stop doing porn!
Legit, I just searched her.
You, sir, are a buffoon.
You're talking about a woman who can't speak and is already willing to go as airtight as the Bullwinkle blimp on the Macy's Day Parade and you want to change that?
Examine your motives.
I had to give you an SB for that one Eddie!
LOL took 10 posts for everyone to notice the supermodels in lingerie hahaha
miranda kerr is the hottest woman ever.
Brooklyn Decker
Buffet. Always.
Definitely Kerr over Ambrosio. Younger and cuter face...Ambrosio has a very thin and hard-featured face potentially from obscene amounts of blow.
However, the hottest girl currently is Irina Shayk. Unbelievable...she's like a younger hotter version of Adriana Lima.
Was there another question too? Something about investing?...Hmm..,sorry, I forget.
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