George Soros dramatically increased his short position, and now his short call on the S&P 500 has a dominant position in his portfolio. He has also increased his holdings in gold, which is often used as a hedge against poor stock performance. It doesn’t seem that Soros is betting on a complete crash, because he increased his positions in Apple and Facebook.
Soros isn’t the only fund manager betting against the market. Carl Icahn increased his holdings in energy stocks that pay a substantial dividend, and may be looking for yield insulation in case stocks decline. In addition, many money managers are increasing their bond holdings. Robert Duggan, managing director at Skybridge Capital, said, “You definitely see managers reducing risk levels. ‘Cautious’ or ‘more defensive’ is definitely something you hear when you talk to managers.”
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Among the many geopolitical problems that might send stocks down is the Scottish referendum vote coming on September 18. George Soros said the current state of Europe and the U.K spells the “worst possible time” for the Scots to split with the U.K and for the U.K to leave the EU.
The situation in Europe is tenuous, with countries turning inward and with tensions between the EU and Russia over the Ukraine. Soros said, “The EU is an unfinished project of European states that have sacrificed some of their sovereignty to form an ever-closer union based on shared values and ideals.” Soros thinks one justification for Scottish independence would be if the U.K decided to leave the EU, which is a possibility, so the Scots could avoid being severed from the EU.