Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

George Soros at his offices in midtown Manhattan

George Soros' bet against the S&P 500 has emerged as one of the key takeaways from the round of quarterly regulatory filings made public in recent days. No wonder: When one of the world's savviest investors sees dark days ahead, it is only natural to wonder if a nasty downturn is coming. However, the more you look at Mr. Soros' bet, the less bearish it looks.

For sure, the headlines sound alarming. "Soros doubles a bearish bet on the S&P 500, to the tune of $1.3-billion," said MarketWatch. Business Insider took it a step further with "REVEALED: George Soros doubled his bet that the stock market is going down."

Both sources are drawing from the same information. Forty-five days after the end of a quarter, large investors with more than $100-million (U.S.) in assets must disclose their holdings to the Securities and Exchange Commission, giving everyone a look at what they have been doing in the previous three months.

Story continues below advertisement

In the case of Mr. Soros, the filings showed that Soros Fund Management – a vehicle for his family's wealth – had put options on more than 7-million units in the SPDR S&P 500 exchange-traded fund, valued at $1.3-billion. The options pay off if the units fall before a predetermined date.

However, this isn't a new investment for Mr. Soros: He has been making a similar move throughout much of the bull market, but has tweaked the size of the bet from quarter to quarter. As Zero Hedge points out, the dollar-amount of the current bet against the S&P 500 is a new record high for Mr. Soros – but as a fraction of the value of his fund, the bet is just over 11 per cent and not a record high.

More importantly, it is hard to see Mr. Soros turning particularly bearish here, given his predilection for stocks that are unlikely to brush off a broad market downturn. In the same quarter, he bought 2.28 million shares in Citigroup Inc. and 2.84 million shares in JPMorgan Chase & Co. He also boosted his stake in Apple Inc. to more than 290,000 shares. These aren't the sort of bets made by an investor who sees financial Armageddon coming.

So what is Mr. Soros up to? Here are three thoughts:

1. Nothing. The information contained in these regulatory filings, known as 13Fs, is 45 days old, which is ancient history in trading terms. Whatever Mr. Soros did in the fourth quarter of 2013 does not necessarily carry into the first quarter of 2014 – which is to say that his bet against the S&P 500 might not exist now.

2. It's nothing more than a hedge. Since Mr. Soros has a lot of money invested in economically sensitive stocks, his bet against the S&P 500 is nothing more than a layer of protection against a broad downturn. Insuring your house doesn't imply that you're anticipating a fire.

3. He wants to profit from a quick dip. Seeing a correction ahead is not a bearish position – after all, just about every Wall Street strategist has argued that the S&P 500 is bound to fall at least 10 per cent in the near future, given that it hasn't corrected in more than two years. Mr. Soros is a savvy, and swift, investor: His bet against the S&P 500 gives him an opportunity to make money when stocks are falling – and perhaps the 5 per cent dip in January was enough.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies