“In investing, what is important is not so much the right answers as it is the right questions.”
George Soros: Master of Risk and Insight in the World of Finance
From Repression to Trading
The name George Soros is known to almost everyone connected with the investment world. Names like Warren Buffett, Thomas Rowe, and John Templeton are familiar only in circles related to economic activities. But the fame of the Great Soros has spread far beyond the economic world. George has left a significant mark on the world of economics and has, in a sense, been able to change the course of history. He is known not only as a liberal but also as an outstanding politician and philosopher. Eastern Europe associates Soros with events such as the collapse of the Iron Curtain, the introduction of market economics, and the emergence of new opportunities. Many also attribute Soros to organizing the Rose Revolution in Georgia and bringing opposition forces to power in the country.
Early Years and Education
The famous trader, investor, and financier George Soros, formerly known as George Schwartz, was born into a Jewish family on August 12, 1930, in Budapest, where he experienced the Nazi occupation and the Holocaust. George’s father was a lawyer and a workaholic. He was not the kind of person who spent much time with family or friends. In 1914, he volunteered for the front and was captured by the Russians, later being exiled to Siberia. He managed to escape and return to his hometown. He once admitted in an interview that his ability to cope with dangers and enjoy risk was due to his father. He mentioned that his father had joined the war not out of patriotic motives but simply because he didn’t want to miss an opportunity.
His mother, Elizabeth, who had not experienced the horrors of war, viewed the world with optimism and had a passion for the arts. Young George was particularly interested in painting and drawing. Additionally, he excelled in learning foreign languages; besides his native Hungarian, he spoke English, German, and French. He was also keen on sailing, swimming, and tennis, and from a young age, he always won at Monopoly. His father always tried to instill in his children a sense of responsibility towards money, teaching them the basics of financial literacy, while never refusing them pocket money. He would give any amount they asked for. The children consciously used this generosity and did not spend money on unnecessary trinkets but mostly saved up for gifts for each other and their parents.
World War II and Emigration
Classmates recalled that during school, the future financier behaved rebelliously and provocatively, enjoying participating in fights. Despite this, he had a well-developed ability to argue, and he defended his beliefs at all costs. His academic performance was inconsistent: he would demonstrate excellent results at times and fall to the level of a mediocre student at others. When World War II began, the Jewish community in Hungary, numbering in the millions, lived in fear of meeting the fate of their fellow Jews in other European countries. The Schwartz family’s way of life became a constant struggle to hide: they spent weeks hiding in cellars, and at best, in the basements and attics of acquaintances willing to take them in for a few days. During the Nazi occupation, the family survived only thanks to forged documents created by the father. This was an important life lesson: sometimes, to survive, one must destroy established stereotypes and go against the law, despite past experience as a lawyer.
Beginning of Career and Path to Success
In 1947, the Soros family emigrated to England. They managed to avoid Nazi persecution, and George was 17 years old at that time. There, he worked as a porter, saved money, and graduated from an economic school, which he completed successfully after 3 years. At lectures, he met Karl Popper, a philosopher who became his ideological inspiration and significantly influenced his worldview. Karl Popper, who lectured him, would later become his mentor. George was drawn to Popper’s idea of creating an open society, and this idea became the goal of his life. He established numerous charitable organizations around the world.
At the start of his career, Soros worked as a salesman in a leather goods factory and then became a commercial agent, traveling in an old Ford to sell goods in seaside resorts in Wales. At the same time, he tried to get a job in trading banks in London but was rejected everywhere due to lack of connections. It was only in 1953 that he managed to get a position at the firm Singer & Friedlander, where he dealt with trading in gold mining company stocks, and his internship and work were conducted in the arbitration department located near the stock exchange.
Moving to the US and Financial Success
Soros sought new opportunities and found them in the US when he was invited to the States by the father of a London friend, who owned a small brokerage firm on Wall Street. Young Soros started his career with international arbitration. However, there was a market crisis, and the business did not perform as well as hoped. Soros developed a new trading method that he called internal arbitration. This type of trading yielded good returns until John Kennedy introduced additional taxes on foreign investments. After the introduction of these taxes, the business Soros had built collapsed overnight.
Shift to Philosophy and Subsequent Return to Finance
After this, Soros returned to philosophy and resumed writing a treatise, which he found very demanding. He was not satisfied with his work and realized that a career in philosophy was not for him. In 1966, he returned to business and created an investment fund with a capital of $4 million, starting with a firm capital of $100,000. After earning substantial profits, he became the head and co-owner of the fund, which was called Double Eagle and would eventually become the famous Quantum Fund. The fund conducted speculative deals with securities, bringing in millions of dollars. By the mid-1990s, the capital of Quantum Fund had reached about $10 billion. Every dollar invested in this fund turned into $5,500.
Black Wednesday and Subsequent Crises
The next event that brought Soros over $1 billion in just one day was known as Black Wednesday, which occurred on September 15, 1992. From this point on, Soros was dubbed the man who broke the Bank of England. In 1997, Soros successfully attacked the national currencies of countries like Malaysia, Indonesia, Singapore, and the Philippines, leading to economic crises in those nations. China was the next target, but local experts managed to create obstacles for the attack.
Later Years and Philanthropic Activities
After such successful manipulations, Soros experienced a downturn. In 1997, he created an offshore bridgehead in collaboration with Vladimir Potanin, but the purchased shares fell in price more than twice within a year. Soros was so disappointed with this deal that he called it the worst investment of his life. Subsequent deals also proved unsuccessful, and Soros decided to step away from financial speculation and dedicate himself to philanthropy.
To this day, the foundations established by Soros spend around $400 million annually on charity. Soros currently resides mainly in his penthouse located in one of New York’s skyscrapers, although he arrived in Manhattan 50 years ago with only a few dollars in his pocket. Despite amassing over $20 billion and breaking the Bank of England, he remains an enigmatic figure. Many historians and journalists studying his biography cannot come to a unified opinion about his philosophical thoughts and published works. The secret of his success remains a true mystery to all.
Personal Life and Family
His reflexivity theory, described in the book “The Alchemy of Finance,” became very popular among traders, but Soros is known to the world not only as a successful trader and investor. He is also known as a very generous philanthropist. In his books, Soros constantly talks about how philosophical theory is useful in situations arising on the stock exchange. However, all of George’s acquaintances said that in practice, he was guided solely by his intuition and gift of foresight, not philosophy.
Soros has been repeatedly accused of using insider information that he allegedly received from high-ranking officials and politicians to his advantage. Opinions from various societies and information sources differ: some see George Soros as a speculator and destroyer of conventional ideas, while others are grateful to him for his work. Analyzing his career, it can be concluded that since 2013, his focus has shifted from stock market speculation to philanthropy and family life. The vast fortune he amassed has not affected his modest character. He does not collect expensive cars, buy sports clubs, or luxurious castles; most of his money is spent on philanthropy, earning him a reputation as a person of divine proportions.
Conclusion
All of Soros’s philanthropy revolves around charitable activities and the Open Society Foundation. George seeks to show that our understanding of the world, especially financial potential, is imperfect. He aimed to prove that the imperfect can be improved or at least made better. On his official website, he discusses starting with scholarships for black students and then moving on to promoting economic development in small countries, education, and minimizing gender discrimination in society.
George Soros has always strived to make the world a little bit better. Soros himself says that he always felt like an exceptional person. His first wife was Elizabeth Wiczak, with whom he was married for 23 years. His second wife was Susan Weber, whom he married immediately after his divorce from Elizabeth in 1983. Susan was 25 years younger and was an art historian in New York. This marriage lasted 22 years. After divorcing Susan, George’s personal life saw changes: he dated Adriana Freyr, a popular Brazilian TV star, but did not marry her. After their breakup, she sued him for $50 million in damages for harassment, emotional distress, and physical abuse.
Modern photos of Soros show that despite his advanced age, he is still ready to lead an active life. This is likely due to echoes from his childhood when he lacked freedom of movement and experienced many deprivations. A vivid example of this is his recent marriage. In 2013, George married 42-year-old dietary supplement saleswoman and yoga expert Tamiko Bolton. The wedding took place at the Karamurt Center for Music and Art, with 500 guests in attendance. From his two previous marriages, the billionaire has five children: sons Alexander, Jonathan, Gregory, and Robert, as well as daughter Andrea. Some of his children have followed in his footsteps: Jonathan initially worked in his investment fund and later founded his own firm.
In February 2022, the American billionaire delivered a lecture at Stanford University, where he expressed his forecasts about the change in leadership and political regime in China at the upcoming 20th National Congress of the Communist Party of China. According to media reports, Soros ceased investments in the Chinese economy, which was related to the growth of government control over the private sector. In 2022, George Soros’s fortune was estimated at $88.6 billion. Some investors consider him to possess an incredible gift for financial foresight, while others attribute his success to the use of secret insider information. On May 15, 2023, a number of media outlets reported Soros’s death, stating that he had died of a heart attack. However, this information was never officially confirmed. On the same day, it was revealed that the publication Ters had accidentally published a pre-prepared obituary, and news of his death appeared. Later, George himself refuted the rumors about his death.
Conclusions for investors
From George Soros’s story, several key investment insights can be drawn. Firstly, adaptability to market changes and the implementation of innovative approaches are crucial. Soros demonstrated how flexibility and the use of unconventional strategies, such as internal arbitrage, can lead to significant achievements. Understanding and managing risks is also essential. His success with the bet against the British pound in 1992 illustrates the need for a calculated approach to risk in order to achieve substantial profits.
Additionally, successful investors must blend analytical methods with intuitive market understanding. Soros often relied on his intuition and philosophical insights into market processes, highlighting the importance of integrating both analysis and intuition. Furthermore, awareness of global economic and political shifts, as well as using resources for philanthropy and social impact, are important aspects of successful investing, as evidenced by Soros’s philanthropic activities.
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