GEORGE Soros bills himself, without a hint of self-mockery, as a ‘financial and philosophical speculator’. The grandiose label is a fitting choice for a man who as a child fantasised about being God and as an adult can tell reporters with a straight face: ‘It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.’
The financial markets deified Mr Soros some time ago, but it was only with Black Wednesday, when his coolly-executed dollars 10bn punt against sterling helped to bring about one of the most spectacular reversals of economic policy forced on any British government, that he began to be widely regarded as a financial Superman.
Since then, there has been his celebrated plunge into gold, spending dollars 400m on a stake in Newmont Mining and triggering an enthusiasm for the metal not seen for several years. This new high profile means that his investments in the housebuilder Berkeley Group earlier this year and in British Land yesterday are seen as more significant than previous positions in UK quoted companies such as TV-am, LIG and MGM.
Born in Budapest in 1930, the younger son of a Jewish lawyer, he often attributes his success as a trader to the inflated sense of self given to him by a devoted father and a doting mother. Escaping to London after the war, aged 17, he took a series of odd jobs, eventually enrolling as a student of philosophy at the London School of Economics. There his intellectual tendencies warmed to the teachings of Karl Popper on the importance of the ‘open society’.
By the age of 24 he was working in the City and a couple of years later he moved to New York. He only began to find his feet six years later with a job at the investment house Arnhold & S Bleichroeder. That led to the foundation of two offshore funds for A&SB, which in due course metamorphosed into the Soros Fund.
Formed initially with a partner, James Rogers, the fund, based in the tax haven island of Curacao in the Netherland Antilles, was recording annual returns of up to 122 per cent by the late 1970s. Behind its success lay an investment strategy predicated on the idea that markets are inherently chaotic and unstable.
‘The major insight I bring to understanding things in general is the role that imperfect understanding plays in shaping events,’ he wrote in The Alchemy of Finance. Where traditional economics is based on theories of equilibrium between supply and demand, Soros studies disequilibrium.
This led to the renaming of the fund as the Quantum Fund, based on Heisenberg’s uncertainty principle, which says it is impossible to predict the behaviour of sub- atomic particles.
The Quantum Fund has made him and his investors very wealthy. Initially worth dollars 4.8m, Quantum and its offshoots are now valued at up to dollars 9bn, one third of which is believed to be Mr Soros’s personal stake.
In recent years, feeling dissatisfied with simply making money, he has championed the reform of Eastern Europe, offering dollars 100m in one go to support former Russian defence scientists, who otherwise might have drifted abroad. There is now a network of 18 Soros Foundations in countries from Albania to Belorussia, as well as two universities.