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George Soros: Life on the Line

The «Time» has named the financier George Soros “modern Robin Hood,” who robs the rich to give to the poor — in Eastern Europe and Russia. The magazine claims that Soros makes huge financial profits by speculating against western central banks and uses those profits to help the post-communist economies of Eastern Europe and the former Soviet Union to build there what he calls the “Open Society”.
investment-guru - George Soros: Life on the Line

The «Time» has named the financier George Soros “modern Robin Hood,” who robs the rich to give to the poor — in Eastern Europe and Russia. The magazine claims that Soros makes huge financial profits by speculating against western central banks and uses those profits to help the post-communist economies of Eastern Europe and the former Soviet Union to build there what he calls the “Open Society”.

George Soros was born on August 12, 1930 in Budapest in a family of successful lawyer Tivadar Schwartz and Erzebet Szucz. parents never denied their sons George and Paul in pocket money: they provided any sum, no matter how much was asked, hoping to teach them to have a responsible attitude to money. The Schwartzes were forced to change the surname to Soros (Hungarian “follower”) in 1936 in response to increased fascist sentiment in Europe.

And in 1944, during the German occupation, the family members agreed to live separately from each other, to attract less attention and get lost among the Hungarians. Thus, the family managed to escape repression, during which it 440,000 Hungarian Jews were killed.

investment-guru - George Soros: Life on the Line

Mass arrests of Jews in Budapest, October 1944; George Soros in Hungary, 1946.

When George was 17, he decided to leave Budapest. He dreamed of a more exciting life with great prospects than in postwar Hungary. Asked by his father where he wanted to go, George said: “To Moscow, to see what socialism looks like, or to London where BBC is». During the war, the whole family often listened to BBC broadcasts. Tivadar dissuaded his son from a trip to Moscow, and George went to the capital of Britain.

“At first I had a very hard time in Britain — says Soros. — I was often starving, once I even envied the cat on the street because it was eating a herring. “

In 1953, Soros graduated from the London School of Economics and got a position in the company “Singer and Friedlander.” He was working and simultaneously training in the arbitration department, which was located next to the stock exchange. His boss was trading shares of gold mining companies.

In 1956, Soros arrived in the US invited by his father’s friend in London, who had a small brokerage firm on Wall Street. In America, George Soros began to invest his friends and acquaintances’ money, as well as remnants of his own modest salary, and after some time he started earning. One day he set a task to make half a million dollars in investments. He felt that this should be enough for him to stop working and devote all his time to philosophy, which he regarded as his sole and true vocation. But as Soros’s revenues grew, surpassing his own expectations, he set himself a new higher goal, enjoying a risky gamble and his talent of the investor.

Since a young age Soros has been fond of philosophy of economy. He is the author of “theory of reflexivity“, which he successfully applied in the stock market gambling. According to this theory, traders make decisions on purchases and sales of securities on the basis of price expectations in the future, and since expectations are a psychological category, they can be influenced by information.

However the people, who worked closely with him, argue that making investment solutions, he rather relies on his intuition and flair of financial foresight than his philosophy. His son Robert says: “He buys when his back starts to hurt and sells when the pain goes away”.

investment-guru - George Soros: Life on the Line

From all the financial transactions that Soros made, the best known is his currency speculation. On “Black Wednesday” September 16, 1992, Soros opened a short position on the pound sterling worth more than $ 10 billion, earning more than $ 1.1 billion in one day. As a result of Soros’s operations the Bank of England was forced to make a massive currency intervention and, ultimately, to withdraw the pound from the regulation mechanism of currency exchange rates of the European countries, which led to an immediate drop in the pound against the major currencies. Since that moment, Soros has been referred to as “The Man Who Broke the Bank of England ” in the press.

George Soros conducted risky operations using credits, acting unusually for the market, preferring more reliable methods. But, apparently, Soros was particularly pleased by the excitement of the stock exchange and an opportunity to be a winner in a difficult situation, which he himself created. George Soros, like his father, loves danger and risk. As he admits that the best year of his life was 1944, when he and his family were in mortal danger.

In 1979, George Soros got actively involved in charity. In New York, he founded his first fund – “Open Society”. Currently, the network of charitable organizations founded by Soros operates in more than 50 countries. Located mainly in Central and Eastern Europe as well as in Africa, Latin America, Asia and the United States, these funds are intended to build and maintain the infrastructure and institutions of an open society.

George Soros made his fortune in times of crisis, if we use the brokerage term, he is a classic “bear”, i.e. a speculator who sells in anticipation of falling prices to make a profit on repurchase. In addition, Soros is not involved in long-term investments, his transactions are short term and are speculative in nature. Besides, Soros heavily uses borrowed funds for his operations, which also indicates a large speculative component.

One of his advantages Soros believes the absence of any particular style of investing. In each situation he seeks to adjust to the market situation.

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