However, Soros believes that the "financial bubble" is often accompanied by rare investment opportunities. He once said: "Financial investment is too active, market speculation is greatly increased, financial bubble will gradually increase, and the fragility and danger of the market will naturally increase with the further activity of investment. Once the' bubble' is formed, it will burst naturally one day. At that time, the collapse of the financial market was inevitable, and the opportunity for us to make big money would follow. "
"Financial bubble" can be seen everywhere in the investment market. If you don't pay attention to investment mistakes, you will lose money all the way. Therefore, the question that puzzles many investors is: Where is the "financial bubble"? How to identify a "financial bubble"? With this question, let's learn Soros's "identification skills"-identifying financial "bubbles" and making big money.
American President Ronald Reagan ran for re-election in August 1985. He carefully planned a series of policies to promote economic development and strengthen national defense construction for his political career. For a time, the American economy flourished. In new york, Tokyo and major foreign exchange markets in Europe, the exchange rate of the US dollar once showed an overall upward trend. On the surface, the American economy presents a prosperous prospect. While the American economy is developing rapidly, the economic situation of other countries in the world is not optimistic. Comparatively speaking, the United States has become a paradise for investors, and many foreign investors are complacent and think that this is a once-in-a-century opportunity to invest a lot of money in the American financial market. For a time, the financial market in the United States was in full swing, and investors thought it was easy to make big money.
At this time, Soros became a naysayer. Soros believes that although this is a strategy to stimulate the American economy, it may be too stimulating and counterproductive, and asserts: "If foreign capital continues to flood in, the overall cost of foreign borrowing and debt in the United States will increase. At the same time, the cost of new foreign capital entering the US financial market is relatively low. When debt approaches the cost or even exceeds the cost of foreign sources, some secondary factors will pierce the existing financial' bubble' at any time. " Soros, who remained calm and sober, began to carefully plan his investment strategy after analyzing the hidden "bubble" behind the market prosperity through active investment transactions. He made a decision to start with adjusting the stock structure, sell those stocks stimulated by Reagan's economic policies, and buy a lot of stocks of enterprises and real estate insurance companies that may be acquired soon. Then when the dollar exchange rate rises, it is sold at a high price, and the low price is replaced by the depreciated yen and mark. After all this, he excitedly said to his assistant, "here comes our chance to make a lot of money." Now we just need to wait patiently. "
Sure enough, not long after, the US Treasury Secretary announced that the dollar began to depreciate. September 7 1985 As soon as the new york foreign exchange market opened, the exchange rate of the US dollar against the Japanese yen began to fall. Five days later, Soros made a profit of 50 million dollars. On September 1 1, the excited Soros wrote in his trading diary: "The biggest gain in the foreign exchange market in my life is actually more than the accumulated losses in the past four years."