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George Soros Follows His Own Advice

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The iconic billionaire returns outside money.

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"We used to play for silver, now we play for life; ones for sport and one's for blood at the point of a knife."
--Grateful Dead

Iconic billionaire George Soros has decided to return money to outside investors in his $25 billion hedge fund after more than four decades at the helm. While most of the assets under management are his and will remain active -- and we can't blame the man for downshifting at the spry age of 81 -- his decision is yet another building block in the new world investing order.

I've been writing about financial markets for more than a decade and trading them for twice as long. While that was once a noble endeavor in a proud profession, the last few years have shifted everything from the mainstream perception of Wall Street to the DNA of the global machination itself. Our civil liberties, the foundation of free market capitalism, and the quality of life for future generations have dynamically shifted as we traverse our current course. (See: The Short-Sale of American Icons)

I once offered that Shock & Awe was a tipping point through a historical lens; as Baghdad blew-up on CNN, I somberly sensed that the United States of America would never be the same. That's not a political statement -- the last thing we need is another one of those, and we don't know what might have been if we didn't invade -- it's simply an observation. Almost overnight, world empathy morphed into global condemnation, and every region of the world has since been on a path of self-preservation.

If we've learned anything through these years, it's that unintended consequences tend to come full circle. Whether it's the moral hazard of bailing out banks, the gargantuan profits of a chosen few -- Goldman Sachs (GS), JP Morgan (JPM), Bank America (BAC), Morgan Stanley (MS), Wells Fargo (WFC) -- the caveats of percolating protectionism, or the growing chasm of social and geopolitical discord, times are changing at a breakneck pace.

As speculators are vilified and hedge funds are perceived as acceptable casualties of war, the financial fatigue will evolve in kind. We've already seen the burnout manifest in trading volume -- upwards of 70% of the flow are the robots -- and we've witnessed it in the financial media, with the reported ratings of some of financial television's marquee shows down as much as 25% year-over-year. (See: The War on Capitalism)

Sun-tzu once said, "If your enemy is superior, evade him. If angry, irritate him. If equally matched, fight, and if not, split and reevaluate." As we navigate this socioeconomic maelstrom, an increasing number of people are weighing their options -- and some of the smarter folks are either going dark, as Stan Druckenmiller did last year. Or they're painting themselves a darker shade of gray, as per Mr. Soros.

Going Dark: What that Means

The younger, more nimble professionals are selling businesses, unwinding trading operations, or otherwise distancing themselves from the capital markets. The thematic reasoning is straight out of an Ayn Rand novel: "I can't compete and when I do, the rules of engagement change in the middle of the game. I'll let the powers that be vanquish themselves and return in three to five years to sift through the remains." (See: The Last Gasp Bubble)

The first time I heard this, I took notice. The second time, it piqued my interest. Now, with four or five savvy seers having pulled the plug, I felt compelled to communicate these observations. I'm often early and sometimes wrong but I'll always put it out there; while few are talking about this, it's on many people's mind.
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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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