The Greatest Investors: George Soros

Born: 1930 (Budapest, Hungary)

Key Positions: F.M. Mayer

Wertheim & Company

Arnhold & S. Bleichroeder

Soros Fund Management

Personal History:
George Soros skyrocketed to fame in September of 1992, when he wagered $10 billion on a single bet against the British pound. This single currency speculation netted the investor a tidy sum of $1 billion in profits in a single day, and a total of nearly $2 billion over time. Soros received the nickname “the man who broke the Bank of England” or “the man who shorted the British pound.”

Soros’ career began well before this landmark speculation, however. In 1947, a teenaged Soros fled his native Hungary for England, ultimately attending the London School of Economics and working in an investment bank in London. He departed for the United States in 1956 and worked as an analyst and investment manager for firms including F.M. Mayer (1956-59), Wertheim & Company (1959-63), and Arnhold & S. Bleichroeder (1963-73).

In 1973, Soros departed his latest position to found his own hedge fund, Soros Fund Management. The Soros Fund eventually became the Quantum Fund, and along the way Soros built his company into an aggressive and highly successful hedge fund that sported average annual returns of more than 30% per year. On two separate occasions, Soros’ fund posted gains of more than 100%.

Beginning in the late 1980s, having achieved a wealth which placed him among the richest people on the planet, Soros phased out his day-to-day control over his fund and instead focused heavily on philanthropic efforts through his Open Society Foundation. Alongside these philanthropic projects, Soros has become increasingly active in the political realm. He has spoken and written extensively on his view of the U.S. and its position in world affairs, human rights, political freedom, and education. He is an outspoken supporter of Democratic political campaigns.

Investment Philosophy:
Soros has a unique ability to combine sweeping regional or global economic trends with highly detailed, leveraged strategies in both bonds and currencies. Soros operated as a short-term speculator and would typically make major bets on the ways in which financial markets would trend. His own belief is that financial markets tend to be chaotic and dependent upon the professional and amateur traders and others who buy and sell assets on those markets. Capitalizing on the human (emotional) capacity of market influencers to change the opinions and investment decisions of others is something that Soros long aimed to do. While he generally went along with investment trends, he was always on the lookout for ways to stand out from the crowd, and these tended to be his biggest paydays. Nonetheless, he reportedly trusted his own instinctive reaction when it came to buying and selling, making his strategy a difficult model to emulate.

Noteworthy Publications:

• "The Alchemy Of Finance" by George Soros (1988)
• "Soros On Soros: Staying Ahead Of The Curve" by George Soros (1995)
• "Open Society: Reforming Global Capitalism" by George Soros (2001)
• "The Bubble Of American Supremacy: Correcting The Misuse Of American Power" by George Soros (2003)
• "Soros: The Life And Times Of A Messianic Billionaire" by Michael Kaufman (2002)
• “George Soros on Globalization” (2005)
• “The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means” (2008)
• “The Soros Lectures at the Central European University” (2010)

Quotes:

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

"I rely a great deal on animal instincts."

"Playing by the rules, one does the best he can, irrespective of the social consequences. Whereas in making the rules, people ought to be concerned with the social consequences and not with their personal interests."

"George opened all of our thinking to macroeconomic theory, and he made globalists of us all by making us understand the importance of geopolitical events on the U.S. economy." (Byron Wien, Morgan Stanley)