Investors can't seem to get enough of stories talking about what this or that famous investor is doing with his or her portfolio. In the latest example, news that George Soros has liquidated his gold holdings has some investors and commentators wondering whether the markets are looking at the end of an impressive run in gold. Whether Soros is right or wrong with this latest move, investors ought to consider some of the reasons to reject or copy his move.
Less-Legitimate Reasons to Copy Soros
Playing a Different Game
Simply put, investors like Soros, Paulson, Gartman and the like are playing a different game than you or me. In many cases, the funds run by famous hedge fund managers are leveraged up the hilt, and have relatively inconsequential trading costs. What that means is that fund managers can sell on Monday, buy on Wednesday, sell again on Friday and make money all along the way. That's something that the average investor cannot do. Playing an anticipated 2% move makes sense in an environment of minimal taxation, minimal transaction costs and massive leverage. For the regular investor, it's a sure way to get poor quickly.
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http://financialedge.investopedia.com/financial-edge/0911/Should-You-Follow-Soros-Out-Of-Gold.aspx#axzz1YOY6xEze
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