Chairman, Soros Fund Management
Born: August 12, 1930, in Budapest, Hungary.
Education: London School of Economics, BS, 1952; Oxford University, DCL, 1990.
Family: Son of Tivadar (lawyer) and Elisabeth Szucs; immigrated to United States, 1956; naturalized citizen; married Annaliese Witschak on September 17, 1960 (divorced June 1983); children: three; married Susan Weber (former art magazine publisher who ran Bard College's Graduate Center for Decorative Arts, Manhattan) on June 19, 1983; children: two.
Career: F. M. Mayer, 1956–1959, arbitrage trader; Wertheim & Company, 1959–1963, analyst; Arnhold and S. Bleichroeder, 1963–1973, vice president; Soros Fund Management, 1973–2000, sole proprietor; Soros Fund Management, 1996–, chairman.
Awards: Honored by Lawyers Committee for Human Rights, New York, 1990; Laurea Honoris Causa (highest honor, in recognition of efforts to promote open societies throughout the world), University of Bologna, 1995.
Publications: Opening the Soviet System , 1990; Underwriting Democracy , 1991; The Alchemy of Finance: Reading the Mind of the Market , 1994; The Crisis of Global Capitalism: Open Society Endangered , 1998; Open Society: Reforming Global Capitalism , 2000; George Soros on Globalization , 2002; The Bubble of American Supremacy: Correcting the Misuse of American Power , 2004.
Address: Soros Fund Management, 888 Seventh Avenue, 33rd Floor, Suite 3300, New York, New York 10016-0001; http://soros.org.
■ In the early 2000s the billionaire financial, philanthropic, and philosophical speculator George Soros was known on Wall Street as the greatest hedge-fund investor in modern times. (Wealthy individuals and institutions often employ hedge funds as an aggressive strategy for investments, with managers using such techniques as arbitrage, derivatives, leverage,
program trading, selling short, and swaps.) Soros's man agement style was that of a short-term speculator who made huge gambles on the directions of financial markets. In 2000, at the age of seventy and after a career of successfully speculat ing on currency with billions of dollars of other people's money, Soros retired from active investing within his company, Soros Fund Management, a private investment management firm.
At the time Soros began to invest with his Quantum Fund in 1969, an initial investment of $1,000 would have grown into $4 million by the time Soros retired. In fact, the Quantum Fund was generally recognized as one of the most success ful investment funds ever, returning, on average, 31 percent annually throughout its 30-year history (up to 1999). After making billions of dollars and often moving entire financial markets, Soros—who was sometimes called "Soros the Speculator"—turned to working full-time through his foundations to give away all of his wealth. Not a man to compromise his principles, Soros actively made himself a powerful and (sometimes) the most infuriating philanthropist of modern times.
Soros was born in Budapest, Hungary, in 1930 and survived the Holocaust despite the German occupation of his country in the spring of 1944. His father, Tivadar, a Jewish attorney, had already survived one deportation as a prisoner in Russia during the Russian Revolution. To avoid the Nazis as they gathered up Jews and deported them to concentration camps, Tividar bought false identity papers for his family members, who then separated and went into hiding.
Soros, then fourteen years old, helped his father formulate thousands of fake documents for many of their fleeing countrymen. Soros remembered that his father would provide free documents for people he knew or who were in immediate danger, would request money only to cover his expenses from people whom he felt a moral obligation to help, and would ask for as much money as the wealthy could afford. Soros reflected on his father's honesty during the Holocaust, but he also remembered the number of laws his father had to break in order to provide safety for his family and countrymen. Soros learned the art of survival from his father, and he came out of the experience resolved to be undaunted by challenges.
Soros left Soviet-controlled Communist Hungary in 1947 for London, where he attended the London School of Economics. There he studied with the philosopher Karl Popper, the originator of the term "open society." (Unlike a dictatorship, an "open society" is one in which debates and arguments are encouraged.) Popper influenced Soros's thinking and ultimately his investment and philanthropic activities.
Soros graduated in 1952 but could find only unskilled jobs. He eventually secured an entry-level position with an investment bank in London. In 1956 he moved to the United States, where he worked as an arbitrage trader with F. M. Mayer from 1956 to 1959 and as an analyst with Wertheim and Company from 1959 to 1963. Throughout this time, but mostly in the 1950s, Soros developed a philosophy of "reflexivity" based on the ideas of Popper. (Reflexivity, as used by Soros, is the belief that self-awareness is part of the environment. Actions tend to cause disruptions in economic equilibriums, which may run counter to the progression of free-market systems.) Soros realized, however, that he would not make any money from the concept of reflexivity until he went into investing on his own. He began to investigate how to deal in investments. From 1963 to 1973 he worked at Arnhold and S. Bleichroeder, where he attained the position of vice president. Soros finally concluded that he was a better investor than he was a philosopher or an executive. In 1967 he persuaded the company to set up an offshore investment fund, First Eagle, for him to run; in 1969 the company founded a second fund for Soros, the Double Eagle hedge fund. When investment regulations restricted his ability to run the funds as he wished, he quit his position in 1973 and established a private investment company that eventually evolved into the Quantum Fund.
By the end of the 1960s Soros had thoroughly studied the discipline of arbitrage, the simultaneous buying and selling of instruments in different investment markets in order to profit from differences between the transactions' prices (that is, buying the underpriced assets and selling the overpriced ones). Using this new skill and his concept of reflexivity, which promised that rising prices would continue to rise (even up to a point that ran counter to traditional economic analyses), Soros realized that he could move money around the world as a way to profit from the constant rise and fall of currencies.
Through the Quantum Fund, which was registered outside the United States to give it maximum trading flexibility, Soros took major global positions for or against currencies, derivatives, commodities, emerging markets, stocks and bonds, private markets, and almost anything he thought would be financially advantageous to him. Soros then used massive amounts of leverage to strengthen his positions. Although this strategy was enormously volatile, Soros's results were outstanding, and he accumulated a large fortune through his management of the fund. At the same time, he became a target for various bankers and government leaders who perceived that they were being harmed by his actions. However, he was also renowned publicly as "the world's greatest money manager" in such publications as Institutional Investor , which in 1981 put him on its cover.
By the end of the 1970s Soros was very rich but also very unhappy and unfulfilled. He quit his business relationship with his long-time investment partner, Jim Rogers, and divorced his first wife, Annaliese; he likewise felt that he had failed in his relationship with his children. In a small apartment in Manhattan, Soros became a recluse. After profiting so much in earlier years, Soros began to lose money and felt guilty about his actions. He sought out therapeutic counseling but did not solve his personal problems until he discovered philanthropy.
In the 1980s Soros began to develop his philanthropic empire. Initially, he pursued endeavors in central and eastern Europe. Near the end of the cold war (at about the end of the 1980s), for instance, Soros supplied organizations in his native Hungary with photocopiers, to counter the censorship of the Soviet Union. As democratic countries were set up across Europe after the fall of the former Soviet Union, Soros acted as a type of central bank for countries in need. He established philanthropic offices in eastern European countries, providing hundreds of millions of dollars to help individuals and countries struggle to free themselves from the old Soviet bloc. After Russia reorganized as an independent country, Soros invested $100 million in scientific and technological endeavors in that country. In Yugoslavia, at about the same time, Soros spent $50 million to help revive war-torn Sarajevo.
Soros's philanthropic headquarters, the Open Society Institute, in New York directed a network of foundations located in numerous nations and employed about 1,300 people. Soros spent billions of dollars funding Open Society foundations around the world, which promoted political pluralism, financed education, strengthened freedom of speech and media, and defended human rights projects.
Although he was well known in Europe in the early 1990s, Soros did not feel that he had much financial clout in the Western Hemisphere. When President George H. W. Bush and Prime Minister Margaret Thatcher ignored his plan to rebuild countries destroyed by the demise of the former Soviet Union, Soros decided that he would create a public personality that leaders would heed. He realized that he possessed the key for formulating his plan when he heard a German bank president talk about possible instability among European currencies.
In September 1992 Soros bet $10 billion that the British pound would fall. First, he sold the Italian lira short, and it proceeded to devalue. Then he made a similar move with respect to the British pound, assuming that it would decline against other currencies. In a twenty-four-hour period Soros reaped $1 billion, and he eventually made $2 billion on the deal. This risk-taking approach earned him international acclaim as he came to be known as "the Man Who Broke the Bank of England." Soros had established himself as a man to contend with, a man to be heard by presidents and prime ministers.
From this point on, Soros held a certain godlike status with many traders, who believed that he could move markets with a wave of his hand. Leaders of countries feared that if he traded against their currencies, he could cause an economic crisis. In fact, Prime Minister Mahathir Mohamad of Malaysia accused Soros of destabilizing his country's economy during the Asian financial panic of 1997–1998. Mohamad also declared to the Association of Southeast Asian Nations, a regional political and trade organization, that Soros had committed a crime when he "attacked" currencies after leaders of Southeast Asian governments recognized the Burmese military regime, which Soros opposed for humanitarian reasons. For better or worse, Soros had gained international status as a man who could change major sectors of the world's financial market.
By 1998, however, Soros had lost $2 billion in the collapse of the Russian economy. The situation turned even worse in 1999, when Soros bet that fledgling Internet stocks would fall. He lost about $700 million more when the emerging sector continued to rise. When he did buy technology stocks, the real downturn that he had predicted a year earlier finally occurred. He lost almost $3 billion when the NASDAQ crashed in the spring of 2000. At that time, Soros withdrew from actively managing his Quantum Fund. In July of that year Soros merged his flagship Quantum Fund with the Quantum Emerging Growth Fund to form the Quantum Endowment Fund, a switch from high-risk speculation to conservative investment.
In the late 1990s and early 2000s Soros was concerned with certain problems in the United States, including ineffective drug laws, containment of mental patients in prisons, unfair immigration laws, welfare reform, and inadequate care for the dying. Soros gave $15 million over five years (toward the end of the 1990s) to groups that opposed the U.S. war on drugs; provided $5 million in 1997 to his Center on Crime, Communities, and Culture, which gives grants to service and research organizations; committed $50 million to the Emma Lazarus Fund to help fellow immigrants acquire full citizenship and to campaign for their rights; and dedicated $20 million to improving the care of the dying.
Soros took up active philanthropy in 1979, when he began providing funds to help black students attend the University of Cape Town in apartheid South Africa. He founded the Open Society Fund in 1979, the Soros Foundation-Hungary in 1984, and the Soros Foundation-Soviet Union in 1987. As of 2004 he was chairman of the Open Society Institute and founder of a network of philanthropic organizations that were active in more than 50 countries. Based primarily in central and eastern Europe and Russia, but also in Africa, Latin America, Asia, and the United States, these foundations were dedicated to building and maintaining the infrastructure and institutions of an open society through the support of a variety of educational, cultural, and economic restructuring activities.
In 1992 Soros founded Central European University, with its primary campus in Budapest and other campuses in Prague and Warsaw. The university was designed to offer postgraduate programs in art history, economics, history, political science, and the social sciences and served as the centerpiece of Soros's educational initiatives in eastern Europe. In 2001, at the age of seventy, Soros retired from active investing, although he retained the chairmanship of Soros Fund Management. He had given away $2.8 billion to his foundations but was still worth some $5 billion. Soros promised to give away the rest of the money before he turned eighty.
See also entry on Soros Fund Management LLC in International Directory of Company Histories .
Kaufman, Michael T., Soros: The Life and Times of a Messianic Billionaire , New York: Knopf, 2002.
Slater, Robert, Soros: The Life, Times, and Trading Secrets of the World's Greatest Investor , Burr Ridge, Ill.: Irwin Professional Publisher, 1996.
—William Arthur Atkins