George Soros, the greatest speculator and a devoted philanthropist
A universally recognized genius of the financial market, worth $23 billion, spending hundreds of millions on charity every year. A person who would not play by others’ rules, who breaks stereotypes and ‘crashes’ national banks...This is George Soros, the greatest trader, who looks at money as “just another component of success”.
“If I played by the rules invented by the others, I would never survive”
György Schwartz — that’s the name the future great financier lived with before he emigrated to England — was born in Budapest in 1930, before World War II. Beyond doubt, the circumstances in which the boy from an intelligent Jewish family was raised in, set the foundation for Soros’ life principles in general and his business strategy in particular: survival first, profit second.
The issue of survival was paramount for every Jew in the Nazi-occupied capital of Hungary. “You are constantly surrounded by Jew-killing Nazis, right in the heart of this insane nightmare”, Soros remembers; the only reason he avoided being sent to death camps was because he understood: you cannot play with the Nazis by their rules. So the young man invented his own rules: he changed his name, converted to Christianity, and spent the entire war hiding at his numerous relatives and friends’ places.
“Someone who wants to get rich doesn't care what he does”
After the war ended and Budapest was freed, the Schwarz family didn’t see the future in Socialist Hungary, so they moved to London and became the Soroses. The new residents of Britain did not have much to their name, but George managed to enter the London School of Economics and graduated with honors in three years.
The young man dreamed about a career as a banker — but in post-war England it was impossible to get a job at a financial institution without somebody’s protection and connections. Especially if you are a Hungarian immigrant. After college, George changed a dozen temporary jobs in three years — from a waiter to a travelling salesman — before he finally made his dream come true: he was hired as a clerk at an arbitrage department of a small finance company.
“Business is not that hard”
Three years later, in 1956, George Soros arrived to the USA, as invited by his friend’s father, the owner of a brokerage company. By that time he was 26 and experienced. This is where his financial career started. He proved himself as a brilliant trader in foreign securities. He even invented his own unique method that made his company — and Soros himself — receive stable profits.
However, the tax on operations with foreign securities introduced in 1963 made this business unprofitable. Soros left financial career, but eventually returned to market trading three years later to establish his first investment fund.
In 1970, Soros headed the Quantum hedge fund, that would shoot to fame after just a few years. For today, the fund made about 40 billion dollars for its investors; it was used as the vehicle for all trading operations of the financial genius.
“With chemical elements alchemy doesn't work. But it does work in the financial markets”
In everything that is related to business, Soros, seems excentric and fearless — but the billionaire actually counts everything to the very intricate detail. When he speaks about himself, he says he is “extremely careful” and would not “go against the crowd that can stomp you into dirt”. There is nothing surprising about it, since Soros’s view of the world was greatly affected by the famous philosopher Karl Popper.
The author of the Theory of Open Society was teaching at the London School of Economics; he was the man who taught Soros that “truth can only be reached in small steps”. Popper’s lectures also helped Soros generate his own theory of market reflexivity, its dependence on the investors’ psychology.
“I’m only rich because I know when I'm wrong...”
Soros is famous for having earned a billion on the collapse of the British currency... in one day. This is impressive, but what you should keep in mind is that Quantum Foundation started buying British pounds five years prior to that fateful (for the Bank of England) and triumphant (for Soros) day — September 16, 1992. In small steps, just as it should be. In any case, today everyone can name the person who “crashed the Bank of England”. However, experts believe that Soros’s impact on the situation is exaggerated: he simply used an opportunity in a smart way.
In situations like this, one must act without delay — and even more so in the opposite situation of losing money, Soros claims: “If you assume some serious risk, you need some strong internal discipline”. Even after “the worst investment in his life” — buying Russian SvyazInvest shares — he mercilessly disposed of the bad assets and quickly recovered despite substantial loss.
“Generally, I am not afraid of losing everything”, Soros jokes. “At least I still have my head. And I have something in that head, too”.