George Soros takes Wall Street’s bull by its horns
George Soros has rightfully gained the reputation as one of the greatest traders of all time. At 86, the inveterate investor has a net worth of just over $25 billion. But he’s also a self-made man in the most classic, Horatio Alger-like sense. Indeed, after World War II, Soros probably qualified as being impoverished. From those humble beginnings, he rose to the 23rd richest man alive on Business Insider.
From philosopher to philanthropist
George Soros was born in Hungary in 1930. Growing up among a large Jewish family, he lost relatives to the Nazi death camps. This, no doubt, had a lasting effect on him and fomented a desire to understand and prevent social calamities like those that befell Europe in the 30s and 40s.
Soros applied to and was accepted at the London School of Economics in 1947. There, he studied under the famous philosopher Karl Popper. Popper had gained world-wide fame as the author who penned the book “The Open Society and Its Enemies”. Soros would later name his vast network of charities, The Open Society Foundations, after this book. While at the university, Soros became fascinated by the way which the battle of ideas ultimately shapes societies. George Soros came to see philosophy as the most important of all the disciplines, even as it was often the least concrete and most ignored. Popper’s approach to philosophy mostly dispensed with idealism, instead focusing on the hard realities and how people can work within the strict limitations of actually existing societies not to create utopias, but to strive for the best possible outcomes. In the framework of the Open Society, this means maximizing individual freedom and minimizing harm. These ideas would later inform Soros’ worldview and serve as a basal impulse behind much of his philanthropy.
Upon graduation and armed with a master’s degree in philosophy, Soros attempted to find suitable work but was rebuffed by a tight labor market on Forbes. He drifted for a number of years, toiling at menial jobs, until he decided he wanted to go work on Wall St. He was hired at a boutique trading firm on the recommendation of a university classmate. Over the next 15 years, he bounced from firm to firm, never appearing to his colleagues as overly interested in the humdrum of the trading floor. Instead, he was enraptured by his own philosophical studies. It was during this time that George Soros began to elaborate his own theory of the functioning of markets, a theory which he termed reflexivity.
In 1973, Soros was finally able to found his own hedge fund, Soros Fund Management. Over the next 40 years, he would put his theories of markets to the test, and those theories were largely validated. He’s made nearly 25% annualized returns since his first days as boss of his own firm. Yet, through all of this, he says that his major skill has been avoiding terrible mistakes. George Soros has conquered the world of finance through careful reasoning, humility and a little dose of luck. And even at 86, he may still have many good years ahead of him.