George Soros: from penniless refugee to billionaire investor
lovemoney staff
31 August 2017
The renowned investor's amazing life story
Against all the odds, legendary Hungarian-American investor and mega-philanthropist George Soros escaped Nazi and communist oppression, and went on to create the world's most successful hedge fund. We take a look at the lucky billionaire's incredible life story.
Early life
George Soros was born Gyorgy Schwartz on August 12 1930 in Budapest, Hungary to an affluent non-practising Jewish family. The future investor's father Tivadar was a lawyer and passionate advocate of the international language Esperanto, and his mother Erzsébet co-owned a successful shop selling fine silks.
Schwartz becomes Soros
Amid a backdrop of rising anti-Semitism in Europe, the Schwartz family changed their German-Jewish surname to Soros in 1936. Schwartz Sr. (pictured) was drawn to the palindromic name because it means 'will soar' in Esperanto and 'next in line' or ' designated successor' in Hungarian.
Nazi threat
By the outbreak of World War II in 1939, the Soros family were increasingly under threat as the prospect of a Nazi invasion of Hungary loomed ever closer. The family were forced to keep a low profile and underplay their Jewish ancestry during this time.
An ambitious child
Despite the ever-present menace of invasion and the constant risk he could be rounded-up by Nazi forces, Soros was a super-ambitious child who fully believed he could change the world. The Nazi threat only served to affirm his liberal beliefs and drive to succeed in life.
Nazi occupation
The Nazis eventually occupied Hungary in March 1944, and a 13-year-old Soros was banned from attending school and forced to report to the local Judenrat ('Jewish Council') set up by the invading force.
Family in hiding
Not long after, the Soros family went into hiding. Soros Sr. managed to obtain falsified documents stating the family were Christian, while his son was passed off as the Catholic godchild of an official in the collaborating Hungarian government, assuming the name Sandor Kiss.
Heroic deed
Thanks to these actions, the Soros family were spared the horrors of the Holocaust and survived the violent siege of Budapest in 1945. Soros Sr. also risked his life to arrange similar fake IDs for other Hungarian-Jewish families, a heroic deed that saved thousands of lives.
Red Army occupation
The Soros family made it through the war but their fortune had dwindled, and the family was experiencing financial hardship by the end of 1945, which was compounded by the Red Army occupation. In early 1947, 16-year-old George, who was vehemently anti-communist, was getting itchy feet.
London beckons
Later that year, Soros packed his bags and emigrated to the UK, staying at his uncle's home in London. Supported in part by his uncle, the bright but hard-up teenager became a student at the London School of Economics (LSE), studying under the great philosopher Karl Popper.
Inspirational ideas
It was at the LSE that Soros was introduced to Popper's concept of reflexivity, which would go on to shape his investment strategy, as well as the philosopher's democratic 'open society' in which personal freedoms are enshrined for all and institutions are transparent, the essence of Soros' philanthropic ethos.
Student life
Soros graduated with a Bachelor of Science degree in 1951 and received a Masters in 1954. Throughout his student days, he worked a variety of menial jobs to help make ends meet, from railway porter to nightclub waiter, and garnered funding from a number of charities.
Looking for work
Following his graduation in 1954, the ambitious graduate wrote to 'every managing director of every merchant bank' in London, pleading for a job, working as a travelling salesman in the meantime to pay the bills.
First finance jobs
After many rejections, Soros eventually lucked-out and landed a clerk role with Singer & Friedlander in the City of London. A colleague at the merchant bank, Robert Mayer, recommended he work for his father's brokerage firm F.M. Mayer of New York and Soros moved to the Big Apple in 1956.
New York's European markets expert
Soros worked at the company as an arbitrage broker specialising in European markets for a total of three years and moved to Wertheim & Co in 1959, where he began to develop his famous theory of reflexivity based on the ideas of his university mentor Karl Popper.
Soros' theory of reflexivity
In a nutshell, the theory of reflexivity says that biases held by traders and investors can bring about feedback loops that can change the economic fundamentals of a situation and result in a cycle of boom and bust.
First marriage
In 1960, Soros married Annaliese Witschak, an immigrant from Germany who lost her parents during the war. They went on to have three children – Robert, Andrea and Johnathan – before divorcing in 1983.
First major investments
Soros bagged a vice president role at investment bank Arnhold and S. Bleichroeder in 1963 and started applying his theory of reflexivity to the markets in 1966, when he founded an experimental fund with $100,000 of the firm's cash.
Double Eagle Fund
In 1969, Soros created the Double Eagle Fund at Arnhold and S. Bleichroeder. The moneyed Rothschild family and other wealthy Europeans invested around $4 million in the fledgling hedge fund. Within a couple of years, the fund was worth an impressive $12 million.
Eponymous funds
A year later, Soros established Soros Fund Management independent of Arnhold and S. Bleichroeder, and finally bid farewell to the company in 1973 to set up the Soros Fund, which was later renamed the Quantum Fund.
Quantum fund success
During the 1970s, the Quantum Fund enjoyed exceptional annual returns of over 30%, which bolstered Soros' reputation and made him one of America's most powerful and respected financiers.
Philanthropy starts
Soros' famed philanthropy began in 1979 when he donated money to help black students attend the University of Cape Town in apartheid South Africa. The legendary investor also started to pump money into pro-democracy movements, particularly in Eastern Bloc communist countries. Over the years, Soros has donated $12 billion (£9.3bn) to good causes.
Ballooning fund
By 1981, Soros' Quantum Fund had ballooned to a whopping $400 million, with investors enjoying bumper annual returns. By this time, Soros was feted as New York's number one investment banker.
Second wife
In 1983, Soros,married his second wife, the historian Susan Weber, who is 25 years his junior, and the couple had two children, Alexander and Gregory. They divorced in 2005 after 22 years of marriage.
Riding high
The Quantum Fund was riding high in the mid-1980s, generating a chunky 122% return for investors in 1985. At this point, the fund was boasting $1.5 billion in assets under management.
First book
Soros' first book, The Alchemy of Finance, was published in 1987. The following year, Soros was investigated in France for insider training over a questionable Société Générale deal and eventually convicted in 2006. He was fined $1.1 million (£849k) for the crime, which he strenuously denied.
'The man who broke the Bank of England'
In 1992, Soros sold short more than $10 billion in pound sterling, triggering a massive devaluation of the currency. As a result, the UK Treasury lost around $4.2 billion and the UK was forced to pull out of the European Exchange Rate Mechanism.
Billion-dollar annual earnings
The following year, Soros became the first person in America to earn over $1 billion a year. By this time, his Quantum Fund was generating a 61.5% annual return, buoyed on by the pound sterling success of 1992.
Asian currencies
In 1997, Soros turned his attentions to the overvaued Thai baht and Malay ringgit. His Quantum Fund short sold on the ailing currencies and pretty much obliterated the baht's peg with the US dollar, partly precipating the Asian financial crisis.
Official retirement
Soros retired in 2000 to focus on his many philanthropic endeavours. Coming out of retirement periodically, the legendary investor has returned to investing twice since he officially quit. Once in 2007 and for a second time in 2016.
Democratic Party donor
Keen to help oust President George W Bush, Soros began to bankroll the Democratic Party in 2004, channelling cash into John Kerry's presidential campaign. His support of the party had made Soros the bugbear of the American right which, over the years, has demonised the influential investor.
Third wife
In 2008, Soros met his third wife, Tamiko Bolton, a yoga company boss who is 42 years his junior. That same year, the billionaire investor financed movements to legalise the medicinal and recreational use of cannabis in the US.
Liberal causes
Soros has backed myriad liberal causes over the years, from drug law reforms and same-sex marriage to rights for refugees.
Most successful hedge fund ever
In 2013, the Quantum Fund generated $5.5 billion (£4.3bn), making it the most successful hedge fund in history. In fact, since the fund was founded in 1973, it has made a colossal $40 billion (£30.1bn).
Betting against Trump
Soros' return to trading in 2016 wasn't as successful as he'd hoped. His Quantum Fund lost almost $1 billion (£772m) hedging against the election of Donald Trump as US president, who Soros has described as a populist conman.
29th richest person in the world
Still, a billion-dollar loss here and there doesn't mean Soros will be filing for bankruptcy anytime soon. As of August 29 2017, the investor with the Midas Touch has a net worth of $25.2 billion (£19.5bn), making him the 29th richest person on the planet.
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