📖George Soros
Conservative Valuation Approach
Conservative valuation protects against overpaying.
Use conservative assumptions in your valuation. Optimistic projections lead to overpaying. It is better to underestimate value and be pleasantly surprised than to overestimate and be disappointed.
🏠 Everyday Analogy
📖 Core Interpretation
In Conservative Valuation Approach, George Soros focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Pessimistic estimates create a built-in margin of safety.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Asian Financial Crisis (1997)
Soros’ funds traded against overvalued Asian currencies as investor fear and deteriorating fundamentals amplified each other, triggering sharp devaluations.
✨ Outcome：Several Asian currencies collapsed, stock markets plunged, and Soros’ funds profited from short positions, though he faced political backlash.
2
Asian Financial Crisis in Thailand (1997)
Spotted flaw in Thailand’s fixed exchange rate with large short-term foreign debt and weakening competitiveness.
✨ Outcome：Shorted Thai baht and related assets; peg collapsed in July 1997, leading to sharp devaluation and profits for Soros’s fund.
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