Expect Changes in Energy, Says Soros

 

If there’s one thing investors are always looking out for, is what the masters of finance are dropping money into, and what they’re taking money out of. When taken into consideration all the famous and successful investors, few are as closely examined as George Soros.

Soros Fund Management, the hedge fund the billionaire has closed off from public investors, accessible only by family, has dumped its shares in Chesapeake Energy NRG Energy and Chevron at the end of last quarter. To investors, George Soros taking the initiative to eliminate all these shares seems like a course of action others should follow. But just how secure an investing strategy would this be for those not trading with billions of dollars at their disposal.

Over the course of the last year, energy prices have been driving, making equity markets volatile. In recent weeks the erratic behavior continued. After reaching an accord, both Russia and Saudi Arabia have halted production of oil in an attempt to raise prices. Iran, however, a holder of a fifth of the world’s oil, didn’t agree and vowed to flood the market with even more of it.

This conflict of behavior from oil producers has left many investors unsure of which way to go, but with a 73% decline in the price of crude from 2014, it makes sense that many would see it as the right time to bow out. And while this may appear to be good for the average investor, giving them a bit more expendable income, this does little to support the nine million Americans who work directly and indirectly in the oil markets, making up 5% of the nation’s workforce. This cut in production affects them disproportionately.

The crippling felt from this loss could also ripple across markets and strike at the economy as a whole. Goldman Sachs has collected numbers on the topic and have determines that the energy sector, accounts for a third of capital expenditures in the US and about a quarter of research and development expenditure. Limit the energy sector and that money goes with it.

Soros doesn’t seem to be the only one that sees something on the horizon for energy in the stock market. Recently, the World Bank released a new forecast that has cut the average price of oil by the barrel from an estimated $51 to $37, changing its original projections from October 2015.

George Soros is a native Hungarian who fled Nazi occupation in 1947. After traveling across Europe he found a home in the UK before moving to the United States. In New York he solidified his career in the financial world.

Outside of his professional career, Soros has invested a great portion of his life to philanthropy. Of the many causes he’s contributed to, the one closest to him is his work with his organization Open Society Foundations, tackling issues of human rights for over 40 years.