A Review Of George Soros’ “The Way Ahead” Lecture

The following review is straight from Operator James, a member of the Macro Ops Hub.

With my TV broken for the last several months, and a useless repairman backed by a company going out of business, I’ve had a lot of time to devote to learning and thinking. Recently I realized I need to dig into fundamentals and decided George Soros was the best place to start. Thankfully there’s plenty of his speeches and lectures online (along with a lot of ‘Soros is the devil’ articles and something about him being a Nazi).

Soros’ “The Way Ahead” lecture series from 2010 is very interesting. It covers his theory of reflexivity and how it applies to financial markets. The lecture contains some interesting ideas that have yet to happen, but seem to apply to the near future. You can watch the lecture below. To follow are my quick notes and thoughts on the material presented.

7:00 to 8:00 – Back in 2010 Soros felt the financial crisis was not the end. He expected another crisis within a year or two. Obviously that didn’t happen. But he explains that he didn’t see the recovery from 2009. I’m not saying a crisis is around the corner, but we should never lose sight that one could be.

9:00 to 9:30 – Eventually the US won’t dominate the world as it has in the past. If Soros is right, a new paradigm will emerge. There will likely be many potential opportunities to profit during the shift. As a 13th generation American, I’m saddened by the short-sightedness of our leaders, but a new world order is not the end, but rather an opportunity.

12:00 to 17:50 – Soros discusses the concept of central and periphery currency flows.

20:30 to 21:00 – After talking about global financial regulations needing a force with teeth, Soros mentions how the system is currently constructed to give rise to ‘financial protectionism’ that could disrupt the global markets.

40:40 to End – Soros discusses many points in the last few minutes of the lecture. The overriding theme is: what happens after the dollar rises and puts developing countries in a bind? The world does not seem to trust American leadership anymore and that could spell trouble for US debt and dollar dominance. My intention is not to say that the following will absolutely happen, but rather to game scenarios to see where things may land. Ultimately, how do we profit from these events should they happen? I will try to encapsulate as many points as possible:

  • If the USD continues to advance higher, will the other powers (including China) want to operate under the Bretton Woods arrangement? Soros’ suggests the world should move to an SDR basket as a reserve currency. But could this realistically happen? I doubt the current US administration would be willing to sit down with the Chinese and allow a new world order where the dollar ceases to be the reserve currency. After all, USD reserve currency status provides certain advantages to the US government (e.g. greater debt spending because foreign governments are willing to buy in).
  • Would it be in China’s best interest to join an SDR-like arrangement? With all the poverty still racking their country, I doubt they’d want to give up their manufacturing advantage by becoming the reserve currency. Maybe they think they can do better than the Americans and prevent the hollowing of their rust belt. But of course I should mention that America can still produce a lot. I see it everyday. However, I also happen to know by dealing directly with the Chinese that they’re skeptical of automation (plant automation is my profession).
  • Around 46:50 to 47:00 Soros concedes that if Obama fails to prevent a double-dip, the population could become susceptible to populism. We didn’t have another dip in asset prices, but the folks in the places that voted for Trump didn’t see it that way. Shortly before the election I interviewed an engineer who worked for the steel industry in western PA. He told me he was looking for a job because a lot of plants had shut down and he knew he was next. This is a common story that illustrates that the people that voted for Trump did not care about stock prices.
  • At 48:50 Soros mentions that China will need a more open society if it wants to be considered a developed country. This point makes me wonder whether a crisis will serve to open China up, or makes it more isolated. This is something we’ll have to wait to see.

These are just my own thoughts on the lecture. I would love to hear yours as well. Please feel free to respond in the comment section below. Thanks!  

To learn more about our investment strategy at Macro Ops, that includes wisdom learned from Soros, click here.

 

 

Subscribe To Our Newsletter

Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.