Soros: The World's Most Influential Investor is a non-fiction book by Robert Slater, first released by McGraw Hill in 1996, that describes the early life, education, work, and philanthropy of a man many consider to be the most influential and successful investor of the twentieth century.Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, From jacket cover blurb
Content In the 1980s Soros ardently strived to expand the wealth of his Quantum Fund which he in turn used to finance his efforts to bring down Communism and establish Open Societies in those Eastern European countries still feeling the effects of stagnant economies and repressive leadership. The fund gained international attention following its profits during the United Kingdom’s 1992 currency crisis, after which Soros was described as “the man who broke the Bank of England."
Though not officially an authorized biography, for this updated 2009 edition Slater did several interviews with Soros, Open Society Foundations Board members, business associates, and friends, and opened the book to edits by Soros and his close associates. Slater had written biographies of other great financial successes and CEOs, and like Soros, was a graduate of the London School of Economics (LSE). His book traces Soros's life from his boyhood in Budapest, his flight from the Gestapo, his emigration to London around the age of seventeen where he waited tables and worked as a lifeguard, his time at the LSE, and finally his extraordinary success as a hedge fund operator and global philanthropist after his arrival in America.
Successful macroeconomic approach
From 1970 to 1980, Soros Fund Management gained 4200% while the S&P advanced about 47%. Prior to 1979, Soros's hedge fund was named the Double Eagle Fund, and then the Soros Fund, part of Soros Fund Management founded in 1969 with Jim Rogers. The Quantum Fund, begun in 1979, was one of the first truly global funds. In 1980, the Soros fund had an incredible year, with an increase of 102.6 percent and a net worth of $381 million, putting Soros's worth at about $100 million.Founding the Quantum Fund, and its growth in 1979 in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, pg. 84 Little known, even in mid-career, on May 28, 1975, the Wall Street Journal ran an article on Soros, which included the headline "Bucking Trends: Securities Fund Shuns Wall Street's Fashions, Prospers in Hard Years...". The article focused on Soros's success as a maverick, noting that he and his partner, Jim Rogers "had a knack for buying stocks before they came into vogue and unloading them at the peak of their popularity. They generally ignored stocks widely held by the major mutual funds, bank trust departments, and other institutions--except as short-sale opportunities". What Slater is telling us, and what top investors knew early was that Soros was a little brighter, had a broader insight into markets, and did a broader and more thorough analysis of global market conditions including government financial regulation than most of the better analysts. And what he would prove in years to come was that, with greater knowledge and experience, he could at times take greater risks, and reap greater rewards than other hedge fund managers. Soros hated the spotlight brought by the press at this stage in his career, and would only cautiously and hesitantly seek it when he later sought support for his philanthropic efforts, or needed to mitigate the impact of losses which might hurt the confidence of his clients, or divert public sentiment from his desire to address global issues.Slater's coverage of Soros Wall Street Journal article in May of 1975 in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, pg. 80
Criticism for shorting companies As Slater importantly noted, Soros has probably taken the most criticism for shorting companies, which in simple terms means acquiring and then selling their securities before their value diminishes. One of his largest shorts early in his career was against Western Union around 1985. Soros noted the company held a lot of depreciated Telex equipment in its inventory. Fax machines, already widely in use, could wire information and cash, formerly the company's chief function, more quickly and less expensively than Telex machines. Soros knew that the company held a lot of debt, which led him to conclude the company stock price was overvalued. Soros Funds successfully bought and sold around a million shares, making them a profit in the millions, but many of course associated Soros's gains with Western Union's corporate losses, though the company is still viable today.Slater's coverage of shorting Western Union Stock in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, pg. 101
Black Wednesday Slater's book provides insights into many of Soros's greatest financial successes paying particular attention to "Black Wednesday" when Soros shorted the English Pound, acquiring roughly 10 billion dollars in the currency in the two weeks prior to September 16, 1992, with the help of $3 billion in loans and the capital provided by other Soros Fund Investors. He then converted most of the $10 billion pounds into German Marks which would hold steady in value against the Pound. Eventually the Pound's value dropped roughly 10–20% on Black Wednesday, September 16, when it was re-evaluated against the Mark. Soros claimed that his holdings in the Soros Financial Fund, and more specifically his Quantum Fund, had profited roughly one billion dollars in the transaction. Soros has been widely criticized for the move, which some economists believe damaged the British economy, but the British Gross National Product recovered steadily and Soros poured nearly all the money into his philanthropy, primarily in Russia, where he made significant gains.
Anatole Kaletsky, a British economist and journalist, at Soros's request wrote a large article in the London Times on "Black Wednesday", stating that within a year in England, "personal income would be growing by 5–6 % a year", and these predictions may have been close, although it is safe to say in September 1992, English economists and the general public in England remained skeptical and deeply concerned.Personal income to rise by 5-6% after Black Wednesday in Chapter 20, Kaufman, Michael T., (2002) Soros: The Life and Times of a Messianic Billionaire, First Vintage Books Edition, Published by Random House, New York, New York, pg. 237.Slater's coverage of Black Wednesday, primarily in Chapter 20, but also in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, pgs. 163-183
Countering the theory still held today by a few political adversaries that Soros might have inadvertently or intentionally acted to damage the British economy, Slater noted that during the weeks prior to Black Wednesday, Soros's funds had invested $500 million in British stocks which aided the British economy. To justify this investment, Soros held the belief that a country's equities often climbed in value following the devaluation of its currency.Slater noted that Soros invested 500 million in British equities shortly prior to Black Wednesday in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, pgs. 165 Earlier in 1984, Soros Funds had also heavily invested in British Telecom and around $20 million in Jaguar Automobiles around the time they were being fully nationalized by Prime Minister Margaret Thatcher.Soros invested in British Telecom and around $20 million in Jaguar Automobiles around 1984 in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, Chapter 12, pg. 99 Investopedia, an online economic site, has written "that economic policies enacted in the U.K. in the aftermath of that day (Black Wednesday) contributed to an improvement in economic growth, lower unemployment, and less inflation."Description of Black Wednesday in Kaufman, Michael T., (2002) Soros: The Life and Times of a Messianic Billionaire, First Vintage Books Edition, Published by Random House, New York, New York, Chapter 17, 207-8, Black Wednesday, Chapter 20, pgs. 235-41.
Losses speculating on the Japanese Yen
In Chapter 25, Slater discusses Soros's large losses in his speculation on the Japanese Yen. Soros believed that trade talks between President Clinton and Japanese Prime Minister Morihiro Hosokawa would result in the United States allowing the value of the Yen to fall against the dollar which would have made imports from Japan more expensive in the United States, slightly discouraging trade from Japan. Soros had been wrong. Labeled by his employees as "The Saint Valentine's Day Massacre", the Japanese Yen closed five percent higher against the dollar on February 14, 1994, three days after the failed trade talks. Soros's failed speculation on the value of the Yen cost Soros Fund Management roughly $600 million. To discourage investors from pulling money from his funds due to a loss of confidence, particularly since rumors were building in the press that Soros had lost far more in the transaction, Stanley Druckenmiller, the acting manager of Soros Fund Management, made a statement to the press that the exact amount of the loss had been $600 million and no more. Druckenmiller also mentioned in order to affirm that Soros's losses had not seriously damaged the value of Soros Fund Management that with the inclusion of the Quantum Fund, Soros's total assets were believed to be between $11.4 and $12 billion.Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, Chapter 25, pgs. 221-4
Prior investment in the Yen Slater also noted earlier in his book, in a move that could be used as a defense of Soros, that the Quantum Fund in 1985 had bought heavily into the Yen in the weeks prior to September 23, 1985, when they suspected James Baker would devalue the Dollar against the Yen. Soros increased his Fund's investment in the Yen by at least $200 million. In the 4.3% devaluation of the Dollar against the Yen, Soros made roughly 40 million, on a total Soros fund holding which he had strongly increased to around $800 million.
As Slater notes, Soros was annoyed by the late U.S. response to the genocide in Yugoslavia. Countering the claims of critics that Soros has exclusively political aims or used his foundations to obtain power, Slater noted that many of Soros's causes have been exclusively humanitarian efforts to aid the poor or at least one case, the victims of war. In 1993, the Soros Humanitarian Foundation provided $50 million in humanitarian aid to Boznia and Herzegovina.Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, Chapter 25, pgs. 246
Philanthropy
Additional narratives on his personal life and Soros's efforts to further human rights in Hungary, China, and Russia, complete the later section of Slater's biography.Soros's foundations were highly active in opposing Apartheid in South Africa, and in countering what Soros viewed as the restraints on economic growth or reduction in civil liberties posed by Soviet influence in many Eastern European countries including first his native Hungary, then Poland, Czechoslovakia, Lithuania, and the Balkans. For his work in his native Hungary towards his efforts to modernize the country, Soros was presented with the Medium Cross of Hungary's Republican Order with Stars, the country's second-highest decoration.Award from Hungary in Slater, Robert, Soros: The World's Most Influential Investor, (2009) New York, McGraw Hill, Chapter 25, pg. 242