George, this comparison between Buffett and Soros recently
published in the FINANCIAL TIMES gives a striking dissimilarity..
The man who is giving it all away;George Soros;He is the world' s
greatest investor and is worth billions. These days a noted p
hilanthropist, this week he said anti-globalisation protesters might be
right. Allan Laing discovers why he plans to divest hi
The Herald (United Kingdom); Mar 9, 2002
SILLY question, really, but is George Soros good with money? Put it this
way, if you had placed (pounds) 1000 in his Quantum Fund when he set it
up in 1969, by the turn of the millennium your modest investment would
have turned into (pounds) 4m. A cumulative annual return of 32%, no less.
Not surprisingly, Quantum is generally recognised as the most successful
investment fund in history.
The world's greatest investor, who spent his working life accumulating a
fortune which beggars the worth of many a nation, was, until his retirement
two years ago, the Jekyll and Hyde of international finance. As a money
manager, he was scary stuff: a ruthless short-term currency speculator who
made some terrifyingly massive bets (usually with other people's money) on
the ebb and flow of the financial markets.
But as a human being, Soros was and remains the very model of
philanthropy; one of the good guys who, like Rockefeller before him, has so
much money he's giving it away. Why? Because he wants to. Because it
gives him pleasure. He has already donated $2.8bn through his own
charitable foundation. He's still worth about $5bn and has pledged to give
the bulk of that away before his eightieth birthday (he's 71).
These days Soros is a full-time benefactor with a network of 50 philanthropic
organisations around the world. He is also an author of books, articles, and
essays on politics and economics. His latest publication, launched in
Britain this week, is called George Soros On Globalization. It ought to
include a warning on its cover: ''This book contains views which some
capitalists may find disturbing.'' In it, Soros acknowledges the contribution
of the anti-globalisation protesters, arguing that they may, in fact, have a
clearer view of the problem than the bankers and the bureaucrats. We
ignore their message at our peril.
He variously opines: ''Globalisation has been lopsided . . . Markets are
amoral; they allow people to act in accordance with their (own) interests but
they pass no moral judgment on the interests themselves . . . It is much
harder to do good than to run an enterprise for profit.''
Maybe next time they hold a world summit, we should look out for an
ageing gentleman in a white boiler-suit and a gas mask at the centre of the
street protest. It might just be George Soros.
Which is rich when you consider that this is the guy once dubbed ''the man
who broke the Bank of England''. It was in September 1992 that George
Soros's nerves-of-steel modus operandi made him the stuff of legend. In
what was as much a hunch as anything else, he wagered $10bn that
sterling would fall. He woke up the next morning in his penthouse apartment
in New York's Fifth Avenue to discover that he was a billion bucks the
richer.
Soros, you see, had spotted trouble brewing across the Atlantic. Germany
was finding it hard to pay for its reunification, so the Bundesbank hiked up
its interest rates. Now, under normal circumstances, Britain would have
been forced to do likewise. But these weren't normal circumstances. The
UK was emerging from a deep recession and higher interest rates would
have strangled any hope of recovery. The only other option was to devalue
the pound, a move which would have resulted in acute embarrassment for
John Major's
beleaguered Tory government. So the Bank of England declared that it
would defend the pound to the hilt.
Which is the point where George Soros came in. He gambled all that
money in the belief that the Bank of England couldn't do it; that it couldn't
possibly withstand the pressure from the movement of funds that would go
against the pound. And, in the end, he was proved right. No-one in history
had made so much money in such a short space of time: $1bn in 24 hours.
He had always been respected, but now he had achieved master-of-the-
universe-like status. Investment brokers throughout the financial world raised
their arms and bowed down before him, declaring ''we are not worthy!''.
George Soros was the god of money.
And there, omnipotent in money heaven, he stayed. Until 1998 when his
hitherto golden touch somehow deserted him and it all went to hell in a
handcart. He made the biggest wager of his life. He effectively bet that the
world was going to end; that the global economy was in meltdown. As the
''Asian contagion'' raged and countries such as Brazil and Russia defaulted
spectacularly, panic ensued. Soros seriously thought that the entire
economic system was about to collapse. He was wrong. The global
economy recovered and capitalism lived to fight another day. Soros lost his
bet. One of his funds dropped 20% in value. ''I goofed,'' he admitted.
Matters went from bad to worse. In early 2000, New York's Nasdaq market
crashed and Soros suffered a $3bn loss in the fallout. Enough was enough.
He announced his retirement. Quantum would be transformed from a
high-risk speculative fund into a low-risk and far more conservative
institution. So, off he rode into the Manhattan sunset, less rich than he once
was, but with enough dosh still in his sky rocket to buy a small- to
medium-sized country.
George Soros was born in Budapest in August, 1930, the younger of two
brothers. His father, Tivador, was a lawyer who, according to Soros, ''prided
himself on working as little as possible''. When Germany invaded Hungary in
the spring of 1944, the Soros family decided not to take up the Nazis'
invitation to Jews to ''present themselves'' to the authorities. Instead, the
family split up, posing as Christians and using forged documents to escape
the attentions of the occupying forces.
His traumatic war-time experiences had a profound effect upon him and
served to shape the rest of his life. The fact was that he actually enjoyed the
danger. It was a Boys' Own adventure which gave him a taste for risk and
uncertainty. His biographer, Robert Slater, says it was the happiest time of
Soros's life, commenting: ''I always found it a very strange way to describe a
life where you were hiding from somebody, who, if they found you, would kill
you.''
Tivador Soros discovered he had a gift for organising false papers and many
other Jews came to him for assistance. Through a network of forgers, he
equipped them with documents. He used a sliding-scale of charges under
which the poor paid nothing but the rich might pay up to 20 times the going
rate. ''It was his finest hour,'' Soros once said, linking his own interest in
philanthropy directly to his father's actions.
After the war, and with Hungary subsumed into the Soviet system, the
teenage Soros decided to seek his fortune in Britain. He worked as a waiter
in London and as a fruit-picker in
Suffolk. He even took a job as a house painter. After studying, very briefly,
at the London School of Economics in 1949, Soros worked for various
stockbroking firms in the City. He emigrated to the US in 1956 where he
secured a job as an arbitrageur (a
trader who specialises in the cross-market transfer of funds to take
advantage of differences in interest rates, exchange rates, or commodity
prices between the markets).
HIS success was such that when his parents joined him in the US he was
able to buy them a two-bedroom apartment. By then, his brother, Paul, was
also working in America, running his own engineering company. Soros
made a decent living on Wall Street, but it wasn't until the late 1960s that
he started to make serious money. As an investor, he was ahead of his
time. Using $200,000 of his own savings, he set up Quantum, one of the
earliest examples of a hedge fund (that's one which provides investors with a
way of hedging their bets against future money-market movements).
By 1981 he was being hailed as ''the world's greatest money manager''. The
Institutional Investor described him thus: ''As Borg is to tennis, Jack
Nicholas is to golf, and Fred Astaire is to tap-dancing, so is George Soros
to money management.''
Only Warren Buffett rivalled Soros as an investment maestro. And Buffett's
approach was infinitely more prosaic. He simply bought stocks in rock-solid
companies such as Coca-Cola and
Disney and held on to them forever.
Soros's philanthropy dates back to 1979 when he began providing funds to
help black students attend Cape Town University in apartheid South Africa.
Since the collapse of communism, he's given more economic aid to
countries in Eastern Europe than most western governments.
He also promotes ideas of free speech and democracy all across Eastern
Europe and the former Soviet Union, through that network of cultural
foundations, the Open Society Institutes. In 1992, he founded the Central
European University, with its primary campus in his native Budapest.
But his good intentions aren't always welcomed with open arms. In a
number of Eastern European countries, Soros has been accused of being
everything from an agent of international Jewish capitalist conspiracy to a
communist collaborator.
His close friend, Ralf Dahrendorf, describes him as a great and generous
man but also as a shy man who doesn't quite see his place. ''He's a loner in
the scheme of things. He's a man of apparent paradoxes but with very
simple and good human motives.''
Privately, Soros is a man of simple pleasures. He doesn't smoke or drink.
He lives comfortably in a Manhattan apartment with other homes in upstate
New York and London. He has been married twice and has three grown-up
children from the first, and two teenagers from the second marriage (to the
art historian Susan Weber) |
