Financial market participants often desire to make accurate decisions and predictions. Amid the pressure of being correct in financial markets, let us reflect on what billionaire investor George Soros calls the real measure of success, which is the profit earned when right and the loss faced when wrong and not just being correct.
Quote of the day by George Soros
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”
This thoughtful idea on risk management by George Soros is mentioned in one passage in the book “The New Market Wizards”, where Stanley Druckenmiller refers to an important lesson he learnt from the Hungarian-American investor.
What does the quote mean?
The quote reflects the importance of risk management rather than being simply right or wrong. It means that accuracy is not the only mark of success, outcomes matter as well. Your decisions might be correct only a few times, but if those moments lead to substantial gains, they can outweigh numerous minor errors. In contrast, if you are correct most of the time but suffer heavy losses when wrong, you can still be on the losing end.
Soros’s idea challenges a core misconception in trading: the notion that success relies on predicting the future. In reality, success in trading primarily depends on risk management and the discipline to adapt when the market defies expectations.
In a broader context, the quote acts as a principle that is especially important in investing, trading, business, and even career decisions, which highlights that discipline, patience, and risk control matter more than pressure or the need to always be right.
About George Soros
George Soros is a well-known Hungarian-American investor and philanthropist, recognised as one of the most successful hedge fund managers. He established Soros Fund Management and is noted for his widespread philanthropy via the Open Society Foundations, which promotes democracy, education, and liberal causes across the globe.
Forbes described Soros as a self–made billionaire and one of the wealthiest individuals worldwide, who built his fortune by making significant bets on undervalued assets. His approach involves unique analysis, identifying catalysts for change, and exercising patience and tolerance during market downturns. When this strategy succeeds, it often yields the highest returns.
He is well known for his billion-dollar trade against the British pound in the early 1990s. Additionally, he pressured Thailand’s central bank to devalue its currency in 1997. More recently, he made a significant bet against the yen, which reportedly earned him a billion dollars, Forbes noted.
Key takeaway from Soros quote
One of the biggest takeaways from Soros’ idea is that one does not need to be correct all the time. What really matters is ensuring your gains surpass your losses and safeguarding yourself against major setbacks. The quote emphasises the importance of making smart decisions and focusing on long-term outcomes instead of the pressure of being right.
