On a recent visit to Budapest, sometime in the mid-1990s, George Soros stood across the street from the apartment building where he had lived until he was fourteen—before the Nazi occupation forced his family into false identities, before the hiding, before the deportation notices he sometimes watched being delivered, before the bodies falling into the Danube. He pointed to a large casement window high enough to clear the trees and the small square full of foliage, and told his twenty-three-year-old son, Jonathan, that he used to sit there for hours, watching the river flow by. A cameraman from a British television crew captured the tableau. It had become something of a ritual for Soros, accompanied by camera crews, to visit this site, or the cellar where he hid, or the apartment building where his father constructed another hideout. Just then, a tour bus rolled slowly by. Soros glanced at it and burst out laughing, exclaiming to his son, "I can just hear the tour director saying, 'And there is Soros, explaining his life.'"
The laughter is the key. Not the pathos of the scene—a billionaire revisiting the geography of his childhood terror—but the ironic distance from it. The self-awareness that he has become a character in his own mythology, and the evident pleasure he takes in observing himself from above, as if hovering near the ceiling. His mother, he would later recall, had done something similar under far graver circumstances: questioned by police during the occupation, she convinced her interrogators that she was indeed the person her false papers stated she was by an exercise of detachment so extreme that she felt herself to be floating near the ceiling, observing her own bravura performance from above. After she was released, she collapsed in something like a nervous breakdown. Her son was furious at her for showing such weakness.
This is the paradox at the center of George Soros's life: the man who built one of the greatest fortunes in financial history through a philosophical conviction that human perception is inherently flawed—that our understanding of reality is always imperfect, always lagging—has spent decades attempting to impose his own vision of reality on markets, governments, and entire nations with a certainty that borders on the messianic. The speculator who insists he recognizes his mistakes faster than anyone else. The philanthropist who gave away billions to promote "open society" while running his foundations like an autocratic czar. The refugee who escaped the particular horror of being a Jew in Nazi-occupied Hungary by embracing the universal—and who, decades later, would tell an interviewer, with a dry chuckle, "Of course, this whole interest in universal ideas is a typical means to escape from the particular."
Two George Soroses. He said it himself: "There can't be two George Soroses, right? There can only be one, right?"
The question of whether he ever managed to fuse them is the question of his life.
By the Numbers
The Soros Empire
~$32BEstimated personal fortune at peak
$18B+Given to Open Society Foundations
~$1BProfit from the 1992 pound sterling trade
$600MLost in a single day on yen bet, February 1994
40+Countries with Open Society foundation operations
1969Year Quantum Fund was founded with $4M
$11B+Quantum Fund and offshoots assets by mid-1990s
The Philosopher Who Couldn't Sit Still
The family name had been Schwartz. His mother, he would tell the journalist Connie Bruck in an extended series of interviews for The New Yorker in 1995, was "quite anti-Semitic, and ashamed of being Jewish." The assimilationist Jews of Hungary lived with what Soros described as "a deep sense of inferiority"—being Jewish was "a clear-cut stigma, a disadvantage, a handicap—and, therefore, there was always the desire to transcend it, to escape it." The name change was part of that escape. The war would complete it.
Soros was born on August 12, 1930, into a prosperous Jewish family in Budapest. His father, Tivadar—a lawyer, a Esperantist, a man who by his son's account was genuinely nonmaterialistic, charging those who could pay and working free for those who could not—had survived a Russian prisoner-of-war camp during World War I. That experience, George would later say, had fundamentally shaped Tivadar: it taught him that in times of catastrophe, the conventional rules of civilized life collapse, and survival belongs to those who can adapt fastest to the new reality. When the Nazis arrived in Hungary in March 1944, Tivadar was prepared. He obtained false identity papers for his family and for many others. The family split up. George, aged fourteen, posed as the godson of a Hungarian government official, sometimes accompanying the official as he delivered deportation notices to Jews or took possession of their property.
Self-control and detachment were the keys to survival. Decades later, when a British television interviewer suggested the experience had been traumatic, Soros rejected the characterization. It was, he insisted, "an adventure." His older brother, Paul—who had arrived in the United States several years before George and built a successful engineering firm—offered a less heroic account: they lived with the knowledge that if they were stopped on the street and their false identities exposed, they would at the very least face imprisonment, and might well be shot. They saw it happen to others, often at the very edge of the Danube, so the bodies would fall into the river.
The adventure ended. The family survived. In 1947, they moved to London. George enrolled at the London School of Economics, where he studied philosophy under Sir Karl Popper—the Austrian-born philosopher whose concept of the "open society," a society governed by rational critical discourse rather than tribal dogma, would become the animating idea of Soros's later philanthropy. But the young Hungarian had grander ambitions than philanthropy. He expected, he would later confess, to become another John Maynard Keynes or
Albert Einstein. He labored over drafts of a philosophical essay entitled "The Burden of Consciousness," which dealt with open and closed societies. The essay was never published. He abandoned his plans to become a philosopher.
Instead, he joined the London merchant bank Singer & Friedlander.
The Niche That Fit Like a Glove
He arrived in New York in 1956, and for the next decade moved from one Wall Street firm to another as a stockbroker, working as an analyst of European securities—a field so obscure at the time that he was essentially inventing it. "I was living in this other place," he told Bruck, referring to the philosophical work that consumed his evenings and weekends, "so those were kind of lost years, in a way, because very little happened that registered."
Byron Wien, an investment strategist who knew Soros since the 1960s—himself a figure of considerable intellectual range, a man who would become legendary at Morgan Stanley for his annual "Ten Surprises" list—described the young Soros with a telling observation: "George was an aggressive money manager, but he had a certain European elegance. He was very hungry and very aggressive—but he didn't seem it. He seemed classier than that."
Perhaps it was the ambivalence that prevented immediate success. But by the time he started the Quantum Fund in 1969—having raised four million dollars from wealthy private investors—he was fully engaged. And the vehicle he chose was perfectly calibrated to his psychology. Hedge funds in the 1970s were a rare breed. At a time when most of Wall Street focused on the domestic market, Soros invested globally.
Leverage was always his enhancer. He began using the exotic combinations of maneuvers—trading futures and options, derivatives—that would later be popularized as the "macro" approach to investing. Quantum was from the start an offshore fund, based in the Netherlands Antilles, open only to non-U.S. citizens and residents (Soros managed to make himself an exception), and investors' profits were not taxed until repatriated. These tax-free profits compounded year after year. As the fund manager, Soros claimed an annual fee of fifteen percent of profits. In the early years, he took much of his fee in shares in the fund. He and his family came to own roughly a third of it.
Peter Rona—a Hungarian refugee who knew no English when he arrived in America at fifteen, went on to take high academic honors at Oxford, and became the head of the First Hungary investment fund—offered perhaps the most precise assessment of Soros's cognitive architecture: "George has a very abstract mind—to the point that he is almost dehumanized. The higher the level of abstraction you're dealing with, the better George gets; the more you're dealing with something about which no scientific hypothesis can be formed, no general laws applied, the worse he gets."
This was more diagnosis than insult. The excellence of his judgments about markets, Rona said, "exceeds by a comfortable margin his judgments about people." Soros had never made money by discovering the company that became a great success. He made money by discovering markets—which are not personal.
I was always detached—and that enabled me to study the game as a game. I was particularly focusing on changes in the rules of the game, not in playing by one particular set of rules but understanding when new rules came into being—and learning that before others did.
Reflexivity, or the Sentence That Took a Lifetime
Soros's intellectual conceit was that he operated from a philosophical theory. He called it "reflexivity"—"It sounds like relativity," he once said—and he wrote an abstruse book about its relationship to his investing,
The Alchemy of Finance, published in 1987. He confessed to being "hung up" about the fact that reflexivity had not received a serious reception, and eventually concluded that he had failed to articulate it properly. "I wrote a book about it," he said, "and it was basically just one idea—I mean, one sentence: 'Our inherently imperfect understanding helps shape the reality in which we live.'"
One sentence. But what a sentence. It sounds almost banal—of course our perceptions shape reality. But Soros meant something more radical: that the error inherent in human perception doesn't just distort our picture of events but actually affects events, which in turn affect perception, establishing a circle of causation. In financial markets, this meant that the prevailing bias of investors could create self-reinforcing trends—boom-bust sequences—that carried prices far from any "fundamental" equilibrium. Markets were not, as the efficient-market hypothesis insisted, always right. They were reflexive systems where participant and observer were the same entity, and where the very act of observation changed the thing being observed.
The practical implication was that Soros subjected his own reasoning to relentless critical scrutiny. And he believed that his greatest strength—"what truly sets me apart from others"—"is that I recognize my mistakes more quickly." Others might cling to their convictions even as the market refuted them. Soros would turn on a dime.
Jack Moorman, a trader who worked for Soros for a couple of years, captured this quality: "No one can size up a situation as quickly as George. It's breathtaking. He has such certainty—not that he's right but that he knows what to look for to see if he's wrong."
There is a paradox lurking here that Soros's associates noticed but rarely pressed. A man whose entire philosophy rests on the imperfection of human understanding nonetheless operated with a conviction so fierce that colleagues described it as "almost preternatural." One person who worked for him put it directly: "He does have this idea that we are all part of this imperfect circle. But he thinks he can take himself outside—that he can come closer to that perfect condition."
The philosopher-king of fallibility believed himself exempt from it. Or at least more exempt than everyone else. This was not hypocrisy. It was something stranger and more interesting. It was the engine.
The Man Who Broke the Bank of England
In mid-September 1992, there was a massive speculators' raid on the British pound sterling. The British government sought to defend the pound's level in the European Exchange Rate Mechanism but ultimately surrendered and allowed the currency to be devalued. The defense had cost the government—and thus British taxpayers—some six billion dollars. Among the biggest winners were commercial banks, investment banks, pension funds, and hedge funds that had bet large amounts against the pound.
The hedge-fund investors were very quiet, very private winners who saw no advantage in being identified. All except one.
Several weeks after the crisis, Soros called an old friend, Anatole Kaletsky, a financial journalist for the London Times, and arranged an interview. In the article, Soros stated that his fund, Quantum, and several of its offshoots had bet roughly ten billion dollars against the pound—about nine billion of which was borrowed, in his customary leveraging. He said the combined speculation, mainly against the pound, had garnered a profit of about two billion dollars. Then he became even more expansive: in the days before the pound's collapse, "we must have been the biggest single factor in the market."
His colleagues in the financial community—including some of Quantum's directors and shareholders—were stunned. One person in the hedge-fund community said: "Why bring light to this subject? Why bring attention to yourself?"
Edgar Astaire—who had been friendly with Soros for close to thirty years, and who served for many years as a Quantum director before eventually joining the operation—offered the explanation: "George never wanted publicity, but he feels he's past that—he feels he's impregnable now."
What Soros wanted was to be heard. He was gambling that he could translate celebrity status from one field—finance—into another: public policy. That celebrityhood was, essentially, generic. And the gamble was entirely strategic. "People like the dictator in Romania, Iliescu, suddenly became very interested in meeting me," he said. "Before, he considered me beyond the pale. So in Eastern Europe my influence increased." He added: "In America, I'm taken more seriously. Also in Europe. So I was able to speak out on issues like Bosnia, for instance, which is what I wanted to do."
The sterling trade made Soros a household name. It also earned him a nickname—"the man who broke the Bank of England"—that he would carry for the rest of his public life. Gerard Steeghs at the World Bank noted that whenever one of Soros's co-investments with the International Finance Corporation came up, "someone on the board will say, 'Should this multilateral institution be doing business with Soros?' There is a feeling, among some people, that he did something indecent with the pound."
Three months after the killing, Soros announced in London that he would donate fifty million dollars in humanitarian aid to Bosnia. The timing was not coincidental.
The Benevolent Autocrat
He had harbored messianic illusions—what he described as a sense of himself as superhuman—since childhood. He was not reticent about this. "It was a bit of a guilty secret until I became successful," he told Bruck, "because it was incongruous—this little schnook in New York!"
The role he crafted for himself in Central and Eastern Europe provided ample outlet. "God in the Old Testament has a number of attributes, you know," Soros said. "Like invisible—I was pretty invisible. Benevolent—I was pretty benevolent. All-seeing—I tried to be all-seeing!" Then, laughing: "So I was playing it out."
His first foundation, established in 1984, was in his native Hungary—the setting for halcyon childhood memories violently truncated. Paul Soros recalled their conversations about this new endeavor: "Up until that point, George wanted to be financially successful. But then it was 'O.K., you have made a hundred million dollars in one year, now what do you do?' And instead of donating five million dollars to a hospital, five million dollars to a university—the conventional way—he felt you could get much more bang for the buck by trying to do things to foster an open society in these countries."
The logic was pure Soros—leverage and vacuum. Five or ten million dollars in Hungary under the Communists meant a lifeline for many people. In the United States, the same amount would have been a rounding error. Soros wanted to get in early, before everyone else, just as he did in the markets.
In Hungary, the foundation provided photocopy machines to public libraries, established scholarships and travel grants, funded theatres, filmmaking, sociological research, newspapers, and magazines. György Jaksity, an analyst at Concorde Securities in Budapest, described the phenomenon: "The first book on business that I read that was written not from a Marxist but from a free-market standpoint said, 'Sponsored by the Soros Foundation.' . . . People like me know that the book they are reading, the teacher who teaches them, were sponsored by Soros. It's a very cultured way of influencing people. You can say, 'I'm
Napoleon Bonaparte—I will kill thousands of people unless you give me Moscow.' Or there's the other way: the Soros way."
Hungary was followed by China in 1986, the Soviet Union in 1987, Poland in 1988. Between 1984 and the fall of the Berlin Wall, Soros spent less than thirty million dollars—modest by the standards he would soon set—but his foundations helped drive wedges into closed societies. And in this early period, Soros was heavily involved: reviewing hundreds of grant applications, sitting around kitchen tables with local dissidents, discussing politics far into the night. He was a benevolent autocrat, and he stuck to his resolution to maintain a low profile.
He had to. The foundations were subversive, and their real motivation had to be "under wraps." An article in the late 1980s referred to him as an "anti-Communist." Soros recalled: "It was highly embarrassing and damaging to me, because I had a foundation in China, where I said I was a supporter of the Open Door policy. 'I'm not an anti-Communist,' I said to them. So you would have to say different things in different countries." All communications had to be private—"I would talk to the government officials, and say one thing in one country, and another thing in another country!" He laughed heartily.
Far from Equilibrium
With the collapse of Communism, everything changed. In his theory of reflexivity, Soros borrowed a term from chaos theory for moments of crisis: "far from equilibrium conditions." In his life as a speculator, such moments had always afforded his greatest opportunities. He believed that his early experience under the Nazis—the original "far from equilibrium" of his life—had given him an edge in times of chaos.
Now, applying his theoretical perspective to the upheavals in Central and Eastern Europe and the former Soviet Union, he saw another such crisis unfolding. He was convinced he had a superior grasp of what needed to be done. He would assume the role of deus ex machina. He would be the market leader, as he had been so many times in the financial markets. The West would follow.
Between 1990 and 1992, he established sixteen new foundations in formerly Communist countries at a furious pace. In some places, the regimes were still blatantly repressive, and the foundations' role was not very different from the earlier, pre-1989 ones. But in other places, the difference was night and day. Whereas in the past his strategy had been to nurture the weak and subvert the powerful, now everything was up for grabs. Soros could, in some instances, help decide who would be the powerful—and he could shape these emerging societies not from the bottom but from the top.
People in government used to sort of dismiss George—this crazy guy interested in Hungary. He's now become a player—but it's very recent, a new phenomenon. He's untrained, idiosyncratic—he gets in there and does it, and he has no patience with government. As I frequently say about George, he's the only man in the U.S. who has his own foreign policy—and can implement it.
When Connie Bruck relayed this observation to Strobe Talbott, the Deputy Secretary of State, Talbott's response was remarkable: "I would say that it is not identical to the foreign policy of the U.S. government—but it's compatible with it. It's like working with a friendly, allied, independent entity, if not a government. We try to synchronize our approach to the former Communist countries with Germany, France, Great Britain—and with George Soros." He even went so far as to call Soros "a national resource—indeed, a national treasure."
The committed two hundred and thirty million dollars to the Central European University, an English-language graduate school headquartered in Budapest that he had established in 1990. A hundred million to a grant-giving program for scientists in the former Soviet Union. A two-hundred-and-fifty-million-dollar pledge for humanities education in Russia. The scale was staggering. And the ambitions grew with it.
The Ukraine Script
Nowhere did Soros put more energy and money into bolstering a government than in Ukraine—and nowhere did his interventions more nakedly resemble market operations translated into geopolitics.
It began in the fall of 1991, when Ukraine declared independence and Soros had what he called a "seminal meeting" with Dr. Bohdan Hawrylyshyn, an internationally known Ukrainian economist who had returned to Ukraine in 1988 and in 1990 became chairman of the new Soros foundation there. The foundation started with the usual mandate: fostering civil society through education and culture. But with independence, Soros and Hawrylyshyn decided on a far more ambitious role. The foundation would build the institutions that would enable Ukraine to function as an independent democratic state. Because of its years as part of the U.S.S.R., Ukraine had none of those institutions in place.
"It was a vacuum," Soros told Bruck. "There was a great willingness to accept this kind of support, which would in normal times be rather intrusive." He added, laughing: "I mean, I can't try to do that in America. They would tell me where to get off!"
Bohdan Krawchenko, a Ukrainian-Canadian historian recruited by Hawrylyshyn and Soros, recalled Soros's assessment on one early visit: "This is a banana republic without the bananas!"
The Soros foundation placed its own people in key government positions. The deputy minister of finance, Olech Havrylyshyn—a nephew of Bohdan—was on the foundation payroll. So was the deputy governor of the National Bank, George Yurchyshyn, a Ukrainian-American who had previously been a vice-president at the Bank of Boston. When Leonid Kuchma, a presidential candidate rated as an outsider, visited Soros in New York in May 1994, Soros was so excited by their conversation that he called Hawrylyshyn in Bucharest and put Kuchma on the phone. Kuchma won an upset victory in early July.
Soros says he had nothing to do with it. But the April 1994 bulletin of the Soros foundation listed twelve grants—eleven of them ranging from five thousand to thirty-one thousand eight hundred dollars. The twelfth, to support independent television stations' coverage of the Ukrainian elections, was for $363,100—an extraordinary infusion of capital in Ukraine, spent in a three-month period.
What Soros undoubtedly did do was enable the successful Kuchma to win a crucial I.M.F.-administered loan program of nearly four billion dollars. When a U.S. economic observer returned with a negative report, Soros was galvanized. He brought Anders Åslund of the Carnegie Institute to Ukraine, directed him to organize a team to work with the Ukrainians on their I.M.F. negotiations, and fired off a memo to the White House, Treasury, State Department, I.M.F., and World Bank arguing that this was the moment and this was the group.
On September 24, 1994, about six weeks after Soros mobilized his forces, Ukraine and the I.M.F. reached agreement. Thomas Simons, the New Independent States coördinator, said the agreement would not have been reached if Soros had not intervened. The Åslund team was "absolutely indispensable." He added: "They were not World Bank, not I.M.F., not these financial institutions. They were from George Soros, and they were working for him"—that is, for Kuchma.
Soros made no bones about it. "If this isn't meddling in the affairs of a foreign nation," he remarked jocularly, "I don't know what is!" And he told Bruck that he saw an exact parallel between the "self-fulfilling prophecies" of his financial life and those of this political realm. Describing an episode in the 1970s when he wrote a report predicting the rise and fall of real-estate-investment trusts and then fueled both that rise and fall with his aggressive buying and selling, Soros said: "I look at Ukraine with the same frame of mind as I look at REITs. . . . By my intervention, I make it happen!"
Dr. Viktor Pynzenyk, the Deputy Prime Minister, confirmed the dynamic from the other side: "We know very well what needs to be done. But Kuchma respects Soros, and Kuchma needs to be convinced by memos prepared by Soros."
The Transactional Soul
Byron Wien, who had known Soros for decades, described his relational style with clinical precision: "George has transactional relationships. People get something from him, he from them." He added that Soros "tends to think of himself in the third person" and "wants to achieve certain objectives—he gets his satisfaction from that, not from human relationships."
The legions of traders who passed through Quantum's revolving door—some lasting a day, others a week—could attest to this. Soros was expert at targeting people's weaknesses, scathing in his sarcasm, eager to stir internecine rivalries as a means of augmenting his control. One story, possibly apocryphal but widely believed: having just hired a group of six money managers, he summoned them all into his office and announced, "Gentlemen, in one year there will be five of you. Now leave."
A former employee told Bruck that Soros had "a horror of intimacy." He said: "George spends most of his energy with other people pushing them away, including insultingly. . . . You'd put your heart into something and George, in front of everybody, would say, 'I'm shorting it.' It was rude, brutal—he was in your face all the time."
Even those who considered themselves friends understood the limitations. Rona emphasized that Soros had always treated him as a friend, and yet "it is hard to consider myself a 'friend.' If you're with him, you're under considerable pressure to perform. You have to come up with great ideas, have to say interesting things, have to be functioning at such a high level, in a way not congenial to ninety-nine per cent of humanity. He is racing along, he knows what your next sentence is, and he doesn't want to hear it."
In these fast-paced information-gathering exercises, Soros missed more than just ordinary human pleasure. "He is not a person of balanced skepticism, who wants to hear all points of view and wants to ponder what is being said," Rona continued. "He wants to get to a point: relevant or not relevant. You're O.K. or you're not."
Soros himself was remarkably candid about all this. "There was always a considerable distance between me and my being a fund manager," he said. "I just didn't mix my personal life with my business life. Even people that I would have liked as people, I did not enjoy in private life, because I had a business relationship, and because interests would then come in. I would have to watch what I say, I would have to censor myself, so it interfered with my freedom."
He realized this was "very different from how most people do business," because "they build it on relationships. I had relationships which were correct—but not invested with emotion."
The Crisis of 1981 and the Turn Toward Immortality
In the early 1980s, Soros paused. His junior partner at Quantum, Jim Rogers—a legendarily iconoclastic investor from Demopolis, Alabama, who would later ride a motorcycle around the world twice and write bestselling books about his travels—left amid fierce acrimony. Soros's marriage to Annaliese Witschak broke up. He was having problems with his three children. And his fund was down 22.9 percent for 1981—the only year so far in which Quantum had posted a negative return.
The British gilt market episode had been traumatic. Soros had cornered the market for long-term government bonds, betting on their rise, buying bigger at each step up. Then it turned. "I took a big breath and went into the market and bought really big," he told a friend. It didn't work. He had a huge loss. He told Bruck he felt "very exposed"—"There was a particular moment when I was under tremendous pressure, and I thought I would have a heart attack—and I thought, This isn't worth it!"
Two friends said this was the only period when they had ever seen Soros not in control. Many of his longtime investors were considering withdrawing their funds. In a move that would become legendary for its seeming irrationality, Soros went to several of them and told them he might not be in a condition to be managing their money, and perhaps they should withdraw. Some did, which caused the situation to deteriorate further. His brother Paul was baffled: "You are really stupid! Why are you doing this?"
"Well, partly, of course, I think it's my self-involvement, because I do find myself rather fascinating," Soros explained. "So there is a certain wanton element, and it is an indulgence. And the other thing is that in my previous lives I always had to keep things secret, starting with having to live with a false identity. So to me it's the reward for success—that I don't need to hide."
He recovered. He hired new traders. He began seeing Susan Weber, an art historian twenty-five years his junior, whom he subsequently married. And he decided to do something that would add a new dimension to his life—and, several associates said, perhaps attain the immortality he had long desired.
The foundations were that something. The money had been made. What followed was the effort to spend it in a way that would change the world.
The Monster He Created
The paradox of Soros's philanthropy was that the man who so abhorred institutions—who saw traditional foundations as too bureaucratic, too slow, inherently corrupting—created the most sprawling, ungovernable philanthropic network in the world and then found he couldn't control it.
His original design was shrewd. Foundations would be short-lived, deprived of the chance to spawn bureaucracy. They would be operated with minimal overhead. While the Ford Foundation might devote three to five years to spadework before opening a local office, Soros foundations would open virtually overnight. And while Ford would send its own people, Soros foundations would be run only by local people, who would feel it was their foundation and be disinclined to exploit it. "They go against human nature," Soros said of traditional foundations, "which is to take and not to give."
For many years, the system worked. The boards of directors had a great deal of latitude, and Soros maintained his low profile. But ultimate control always resided with him. For many years, the board of the Open Society Fund—an umbrella organization—consisted only of Soros, his wife, and his personal attorney, William Zabel. (Soros is said to have presented Susan with a prenuptial agreement. At their wedding, when the minister recited the traditional vow "For better or worse, I do endow thee with all my worldly goods," Soros turned to Zabel and asked, wryly, whether he could state this without being bound, and, upon being told that he could, nonetheless muttered in Hungarian, "Subject to any prior agreements with my heirs.")
With the proliferation of foundations and the huge sums being funneled through them—roughly three hundred million dollars a year by the mid-1990s—Soros came to feel he had created a monster. "I made all the decisions, and nobody knew what the decisions were," he told Bruck. "People turned up and claimed that I'd authorized this or that, and for all I knew, I did!"
The Moscow foundation was plagued by corruption: employees had lent foundation monies to a car dealership in exchange for more than sixty cars, several of which they took for their own; computers meant for distribution had been stockpiled in a warehouse; roughly fourteen million dollars, supposed to have been spent on programs, had been deposited in banks of such poor reputation that the deposits raised the question of kickbacks.
Soros was characteristically frank about his role in the debacle: "Our stupidity in sending them five million dollars a month for a program without looking at how they were spending it." He had wanted to make a successful transformation program bigger. "I threw a lot of money at it—and, in doing that, I destroyed it, effectively. Because it was too much money."
Black and White in a Region That Has Neither
The case of Macedonia crystallized the dangers of applying a market mind-set to geopolitics. Soros arrived in Skopje, the Macedonian capital, in September 1992 during a whirlwind tour through his foundation network. He had come directly from Bulgaria, where a board member of his Sofia foundation had given him the prevailing Bulgarian view: that there was no such thing as an ethnic Macedonian, and that Macedonia's attempts to establish this identity cloaked irredentist aspirations bequeathed by Tito.
"Soros knew nothing about Macedonia," said Ljubica Acevska, the Macedonian representative in Washington. "When he arrived, his head was filled with propaganda from Bulgaria—he was probably sorry that he was here. Then he had a meeting with the Prime Minister, whom Soros really likes, and the President had a lunch for him—and he changed his mind."
That afternoon, Soros held a press conference announcing an additional million dollars for his Macedonian foundation and—carrying as much weight—changing its name from the Open Society Foundation of Skopje to the Open Society Foundation of Macedonia.
A former colleague from the financial markets identified the pattern instantly: "As a fund manager, you're looking at life and then simplifying it in order to find predictive qualities. So he gets the 'broker's recommendation'—that is, the consensus view—from Bulgaria. Then he gets to Macedonia, and, instead of getting corroboration, he decides that the reality is totally different. And he thinks, If I hit the reality hard, the illusion will give way. It's his perfect market position!"
But this person also noted the crucial difference: "In the market, you see if you're right or wrong; the market tells you. Now George is in an area where there is no real right or wrong, where it's more nuanced. He says, 'If I spend enough, I will make it right.'"
In the good-guy, bad-guy formulation to which Soros was so partial, the Greeks became the bad guys. He did not go to Greece to get the Greek view. He lobbied aggressively for U.S. recognition of Macedonia, wrote sharp letters to President Clinton raising parallels with 1938 and appeasement, and funded an advocacy organization—the Action Council for Peace in the Balkans—that produced reports supportive of Macedonia's position. The letterhead listed fifty people. It did not list Soros. Nor did it list John Fox, the head of Soros's Washington office, who, according to the Action Council's own executive director, was the behind-the-scenes director of the policy group.
The problem, one person with considerable diplomatic experience observed, was "the extremity of his views—his tendency to beatify one side and demonize the other." A more moderate course might conceivably have produced a settlement. Instead: "Soros sees this situation in black-and-white. But in my view, no. In this region, there is no black-and-white, and it is a mistake to view it that way."
The Tax-Free Ride and the Giving That Followed
Among the more stunning revelations Soros offered Bruck—in that compulsive, almost wanton self-exposure that so baffled his associates—was a casual disclosure about his taxes.
"My lawyer, for instance, who set up the tax structure which effectively protected me from taxation for many years—until the loophole was finally plugged, and I became a fully taxpaying citizen—just couldn't understand why I should ever allow myself to be seen!"
Gary Gladstein, the chief administrator of Soros Fund Management, confirmed the arrangement. Before the Tax Reform Act of 1986 created the "passive foreign-investment company" regime, taxes on Soros's Quantum profits had been deferred until he sold his shares in the fund, which he rarely did. "So he had no taxes—he had a free ride."
The law required that to avoid taxation, Soros could not have a controlling interest—more than fifty percent—in the fund. This was why the 1982 shareholder redemptions, which pushed his ownership toward the fifty-percent mark, had been so perilous, and why his urging investors to consider withdrawing was all the more remarkable. The fact that he was not even a director of Quantum—which he obviously controlled in every meaningful sense—would have helped his claim to the I.R.S.
From 1969 through 1986, Soros's profits compounded tax-free. In those years, the fund—of which he owned roughly a third—grew from four million dollars to more than a billion and a half. Without the arrangement, he would probably have owed the I.R.S. at least a couple of hundred million dollars.
The first years he had to pay taxes—1987 and 1988—were not very good years at Quantum. Returns of 14.1 percent and 10.1 percent. "It was in '89"—when the fund achieved a return of 31.6 percent—"that his taxable income went up so much," Gladstein said. And it was also then that Soros's massive giving began. He now aimed to give away fifty percent of his income each year—the maximum deductible amount.
The timing was not lost on observers. The sums he managed not to pay the I.R.S. for many years put his present giving in a slightly different light.
Accepting the Human Condition
In late November of the mid-1990s, Soros delivered a speech at Columbia University's College of Physicians & Surgeons to inaugurate his newest project: Death in America, which aimed to promote a better understanding of the experiences of dying and grief. He had committed five million dollars a year for three years. "In America, the land of the perpetually young," he told the audience, "growing older is an embarrassment, and dying is a failure."
Then he described the death of his father. Tivadar, terminally ill, had agreed to an operation but did not want to live if his personal integrity was invaded. It was, and then he wanted to live. Speaking haltingly, Soros said: "I was kind of disappointed in him. I wrote him off." A few weeks later, his father died. "I was there when he died, yet I let him die alone. I saw him, but I didn't touch him. The next day, I went to the office, but I didn't tell people he had died. I was, in a way, denying his dying." Later, reading Kübler-Ross, he realized it might have made a difference if he had held his father's hand. "But I have since forgiven myself, because I did not know any better."
The confession was stunning in its nakedness—a multibillionaire standing before a roomful of physicians and admitting that he had failed his dying father, that his pathological detachment had cost him one of the most fundamental human acts, and that he had forgiven himself for it only after reading a popular book about death. One friend marveled at what seemed, at times, "exhibitionism," and conjectured that Soros—an extremely undemonstrative person who appeared cold, detached, and insular—was, through these personal displays, attempting to forge some human connection, not with any one person but with many people. As, of course, his philanthropy also did.
By the end of the 1990s, Soros had begun charting new directions. He announced that he was renouncing his policy of not investing in countries where he had foundations—a reversal that dismayed many in his organization who had used that principle as a rebuttal when critics charged that his philanthropy was a smoke screen for empire-building. He acquired a joint venture with Radio Free Europe to create what would become a vast information network. He continued to accumulate foundations: South Africa, Haiti, Burma, programs across the United States.
In 2003, he provided start-up funding for the Center for American Progress. He pledged millions to groups opposing the reelection of President George W. Bush. He became a prominent supporter of Barack Obama in 2008 and 2012, donated to Hillary Clinton in 2016, and to Joe Biden in 2020. By 2017, he had given some eighteen billion dollars to the Open Society Foundations, making it one of the world's largest philanthropic organizations. With his support of Democrats and liberal causes, he drew relentless criticism from Republicans and conservatives and became the focus of conspiracy theories so widespread and so untethered from fact that they constituted, as one documentary noted, a phenomenon unto themselves.
In December 2002, a French court convicted him of insider trading for a 1988 stock deal involving Société Générale and fined him €2.2 million. He appealed; the conviction was upheld by France's highest court in 2006.
In July 2011, facing new federal regulations, Soros announced that the Quantum Endowment Fund would no longer manage the money of outside investors. It would handle only the assets of Soros and his family.
Gilbert de Botton, the chairman of Global Asset Management in London and one of Soros's earliest investors, had been asked years earlier what he thought of Soros's public metamorphosis. De Botton replied: "If he were a chum, I'd have twenty-six opinions. But he's too precious a financial asset—so I deliberately avert my gaze." Pressed, he said: "There is a subtext here—the unspoken word in the room. Is this an incipient megalomania? And is it affecting his ability to make business decisions? And my answer to the second part of that question is no."
As for the political role Soros had created for himself, de Botton continued: "There is such a vacuum, isn't there? And in a time of crisis someone can emerge. As when a family is in crisis, and suddenly the chauffeur takes charge! But then the crisis passes, things go back to normal. I would expect that in some of these countries they will eventually say, 'We don't care how many billions this guy has, we don't want him telling us what to do.'"
The Final Coming to Terms
"I know I'm not what I'm cracked up to be," Soros told Bruck. "I'm not really as much of a philanthropist as the amount of money would suggest." He added: "It's only because I don't care about money that I give it away!"
He complained that he would not be able to give it all away before he died, although he would like to—trusting no one else, naturally, to spend it as well as he would.
A person who had known him for many years offered a diagnosis that doubles as an epitaph for the contradiction at the center of his life: "Messianic zeal often works as concealment for what one really craves—and it strikes me that the more George covets control the more hysterical he becomes about open society. But I don't think he recognizes this in himself. He is not a knowing charlatan. He is sincere."
In one of her final conversations with Bruck, Soros was asked about his decision to invest in countries he had previously avoided. He was frank: "People who moved in six months ago have actually made ten times on their money." But he also proposed a personal motivation. "By having these foundations, I was sort of able to play God, right? I was something above it, outside it, benevolent, farsighted, godlike—O.K.? If I become an investor, I come down to earth, you know? I'm just a player."
He paused.
"So in some ways it may be the final coming to terms with being a human being, after all. In that way, I feel it's a little bit painful, quite tricky—but, in a way, it's the ultimate challenge: to accept the human condition."
On a shelf somewhere in Southampton, or Budapest, or the offices at Columbus Circle—as far from Wall Street as he could get—sits a photograph of a stately building overlooking a small square, full of foliage, and the Danube, just beyond. A large casement window, high enough to clear the trees. A boy who used to sit there for hours, watching the river flow by.
George Soros's operating principles were forged in an unlikely crucible: the intersection of wartime survival instincts, philosophical abstraction, and raw financial aggression. What follows are the core tenets that governed his decisions across markets, philanthropy, and geopolitics—principles that are as instructive for what they reveal about their limits as for their power.
Table of Contents
- 1.Treat your understanding as inherently flawed—and use that as an edge.
- 2.Recognize your mistakes faster than anyone else.
- 3.Find the vacuum before anyone else fills it.
- 4.Use leverage as a force multiplier—in capital and in influence.
- 5.Translate celebrity in one domain into authority in another.
- 6.Design institutions that resist the pathologies of institutions.
- 7.Operate in gray areas where oversight is minimal and maneuverability wide.
- 8.Make detachment a superpower—but understand the cost.
- 9.Go against the herd, especially when the herd is complacent.
- 10.Accept that self-fulfilling prophecies work in politics as well as markets.
- 11.Subject your own reputation to strategic management.
- 12.Know that the ultimate challenge is accepting the human condition.
Principle 1
Treat your understanding as inherently flawed—and use that as an edge
Soros's entire intellectual framework rests on a single proposition: our understanding of reality is always imperfect, and that imperfection shapes reality itself. This is not modesty—it is a tactical doctrine. Most investors, most policymakers, most people proceed on the assumption that they see the world more or less as it is. Soros proceeds on the assumption that everyone—including himself—is operating from a distorted picture. The edge comes not from having a better picture but from knowing the picture is distorted and looking for the moments when the distortion becomes unsustainable.
In markets, this meant identifying "far from equilibrium conditions"—moments when the gap between perception and reality had become so wide that a violent correction was inevitable. In philanthropy, it meant recognizing that closed societies were built on a foundation of official unreality—and that modest investments in truth-telling (photocopy machines, uncensored books, independent media) could crack the edifice.
Tactic: Build a systematic practice of testing your core assumptions—not occasionally, but continuously—and design your strategy around the expectation that you are wrong about something important.
Principle 2
Recognize your mistakes faster than anyone else
Soros believed his single greatest competitive advantage was the speed with which he could abandon a losing position. "I recognize my mistakes more quickly," he said. Jack Moorman's observation is worth rereading: Soros had "such certainty—not that he's right but that he knows what to look for to see if he's wrong."
This is not the same as being indecisive. Soros entered positions with enormous conviction and massive leverage. The difference was that his conviction was held provisionally—more like a scientific hypothesis than a religious belief. When the evidence turned against him, he didn't argue with it. He turned on a dime. This is psychologically agonizing for most people. Admitting you're wrong feels like a defeat. For Soros, it felt like survival—which, given his childhood, it literally had been.
Tactic: Define in advance the specific evidence that would prove your current thesis wrong, and commit to acting on that evidence immediately, regardless of sunk costs or ego.
Principle 3
Find the vacuum before anyone else fills it
Paul Soros identified the core insight behind his brother's philanthropic strategy: "instead of donating five million dollars to a hospital, five million dollars to a university—the conventional way—he felt you could get much more bang for the buck by trying to do things to foster an open society in these countries. To try to do things here takes much more money, and the possibility of having an impact is much more limited. But there it was a vacuum."
This was a direct translation of Soros's market philosophy. In financial markets, the greatest returns come from identifying and entering markets before they are "discovered"—emerging markets, in the term that Soros helped coin. In philanthropy, the same logic applied: post-Communist societies were vacuums where relatively modest sums could achieve outsized effects. In Ukraine, Soros's foundation was there when there was nothing—and that early presence became structural influence.
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Soros's Vacuum Detection Framework
Applied across domains
| Domain | Vacuum Identified | Entry Strategy |
|---|
| Finance (1970s) | Global investing when Wall Street was domestic | Quantum Fund's macro approach |
| Philanthropy (1984) | Communist Hungary before anyone else | Open Society Foundation Budapest |
| Geopolitics (1991) | Ukraine at independence with zero institutions | Foundation staff in government positions |
| Information (1994) | Post-Communist media landscape | Radio Free Europe research institute acquisition |
Tactic: Allocate a disproportionate share of your resources to spaces where competition is nonexistent and the rules are not yet established—before the crowd arrives to bid up the price.
Principle 4
Use leverage as a force multiplier—in capital and in influence
In the sterling trade, Soros bet roughly ten billion dollars against the pound—about nine billion of which was borrowed. This 10:1 leverage ratio was not unusual for him; it was the defining feature of his investment style. Leverage transforms modest conviction into outsized outcomes. It also transforms modest errors into catastrophic ones, which is why Principle 2 is the necessary complement to Principle 4.
The same logic applied to philanthropy. By placing foundation-funded advisers inside the Ukrainian government, Soros leveraged a relatively small staff into influence over a nation's economic policy. By funding the Action Council for Peace in the Balkans—a nominally independent organization that produced reports supportive of his preferred policies—he leveraged his money into the appearance of broad-based expert consensus.
Tactic: When you have high conviction and information asymmetry in your favor, concentrate your resources aggressively—but ensure you have a mechanism for rapid de-leveraging if the thesis fails.
Principle 5
Translate celebrity in one domain into authority in another
Soros's decision to publicize the sterling trade was not vanity—it was strategy. He calculated that celebrity in finance would grant him a hearing on foreign policy, and he was right. "People like the dictator in Romania suddenly became very interested in meeting me," he observed. The gamble was that "celebrityhood was, essentially, generic."
This is a principle that most people in finance or technology understand intuitively but execute poorly. Soros executed it with the same aggression he brought to the markets. He published policy speeches and mailed them to hundreds of people in business, government, academia, and the press. He appeared on television. He cultivated a Washington contingent at his Southampton estate. He opened a Washington office that one associate described as "his State Department."
Tactic: If you have credibility in one domain, spend it deliberately in the domain where you want to build influence—but recognize that the exchange rate may be lower than you expect, and that expertise does not transfer as cleanly as reputation.
Principle 6
Design institutions that resist the pathologies of institutions
Soros's attempt to build "anti-foundations"—lean, unbureaucratic, ad-hoc, entrepreneurial, even "chaotic"—was a genuine innovation in philanthropy. Traditional foundations, he argued, were too bureaucratic to respond to real need, laden with overhead that benefited givers instead of recipients, and inherently corrupting.
His alternative: short-lived foundations that would dissolve before bureaucracy could form. Local people running local operations with considerable autonomy. Minimal overhead. Overnight establishment rather than years of spadework. The system had real strengths—it was responsive, fast, and it created genuine local ownership.
It also had a fatal flaw: it depended entirely on Soros's personal attention. "The name of the game in the foundation is access to George," one employee said. "I was often reminded of the Russian czars before the Revolution—all the rules in the empire didn't mean anything if you could get the czar to sign a decree." When Soros's attention moved on, the system that had depended on his oversight became ungovernable.
Tactic: When designing organizations to avoid institutional pathologies, ensure the design does not simply replace institutional pathology with dependence on a single decision-maker—because that person's attention is the scarcest resource of all.
Principle 7
Operate in gray areas where oversight is minimal and maneuverability wide
Throughout his career, Soros gravitated toward regulatory lacunae. Quantum was an offshore fund, free of virtually all regulations that applied to U.S. public investment companies. Within that environment, many former employees said, Soros gravitated to areas—like currency trading—where oversight was even more minimal. In 1979, he signed a consent decree in a SEC case involving stock manipulation. In 1986, he was fined by the Commodity Futures Trading Commission for exceeding speculative limits.
In philanthropy, the same instinct operated. His foundations in some countries engaged in plainly political activities—supporting election campaigns, placing operatives in government—while their annual reports listed bland programmatic categories. The I.R.S. rules on tax-exempt organizations prohibit most political activity, but enforcement in foreign jurisdictions was effectively nonexistent.
This is not a recommendation to break laws. It is an observation about where Soros consistently found the greatest room to maneuver—and a caution about the risks. As one associate put it: "George has his own rules—they're different, larger. He is unencumbered."
Tactic: Understand the regulatory landscape of any domain you enter—not to find loopholes, but to identify the zones where discretion is widest and the first-mover advantage is greatest. But know that operating in gray areas eventually attracts scrutiny.
Principle 8
Make detachment a superpower—but understand the cost
Soros traced his extraordinary detachment to 1944—the year he recalled more vividly than any other in his life. Self-control and emotional distance were survival skills under the Nazis. They became investment skills at Quantum. "A lot of people who invest get terribly excited," he said. "I was always detached—and that enabled me . . . to study the game as a game."
The cost, however, was real. His admission that he "let his father die alone"—that his pathological detachment had prevented him from holding a dying man's hand—is one of the most nakedly human moments in the annals of financial biography. His first marriage ended. He was, by his own admission, "a bad father" to his first three children. His employee relationships were transactional at best, brutal at worst.
Tactic: Cultivate emotional detachment as an analytical tool—the ability to observe your own situation from outside, without sentimentality—but build deliberate practices to reconnect with the human dimensions that detachment erases.
Principle 9
Go against the herd, especially when the herd is complacent
One former colleague identified Soros's deepest instinct: "That's when the wind's in your hair"—when he was going against the consensus. The sterling trade was a perfect expression of this: while the British government and most market participants believed the pound could be defended, Soros bet massively that it could not. His Macedonia intervention followed the same pattern: the prevailing view (from Bulgaria, from Greece) was that Macedonia's claims were illegitimate. Soros decided the reality was totally different and bet aggressively on his contrarian assessment.
The danger of contrarianism, though, is that it can become its own kind of herd behavior—an automatic reflex to oppose whatever the consensus holds. Soros's Macedonia intervention, for all its contrarian boldness, may have contributed to the very intractability it was meant to resolve.
Tactic: Seek out situations where the consensus view is most complacent—but rigorously test whether your contrarian position reflects genuine insight or merely the psychological pleasure of going against the crowd.
Principle 10
Accept that self-fulfilling prophecies work in politics as well as markets
Soros was explicit about this. "I look at Ukraine with the same frame of mind as I look at REITs," he said. "By my intervention, I make it happen!" In markets, a sufficiently large and aggressive bet can move prices in the direction you've predicted, turning your prediction into reality. In politics, sufficiently large and aggressive funding can shift the balance of power in the direction you favor.
The danger is that this logic has no natural stopping point. If you believe you can make reality conform to your predictions through the sheer force of your intervention, the question of whether your prediction is actually correct becomes secondary. The market, at least, provides a corrective: you go bankrupt. In politics, the feedback loop is much longer and much noisier. As one colleague observed: "In the market, you see if you're right or wrong. Now George is in an area where there is no real right or wrong, where it's more nuanced."
Tactic: Use the power of self-fulfilling prophecies strategically—but build in external checks that can tell you whether your intervention is creating genuine value or merely creating the appearance of success through brute force.
Principle 11
Subject your own reputation to strategic management
Soros regarded his reputation as "an asset, in a way, that has to be managed." When Quantum lost six hundred million dollars in a single day in February 1994, Soros seized the opportunity to publicize the loss—despite the fact that much of it was later recovered. His instruction to Gary Gladstein: "Let's show people that we're human."
This was sophisticated image management. By voluntarily disclosing losses, Soros diminished the perception of financial invincibility that made governments nervous. By publicizing his philanthropy in the immediate aftermath of the sterling profit, he softened the image of the ruthless speculator. Every element of his public persona was calculated—not to deceive, but to control the narrative.
Tactic: Treat your reputation as a strategic asset requiring active management. Voluntarily disclose vulnerabilities to build credibility, and time your most generous acts to counterbalance your most aggressive ones.
Principle 12
Know that the ultimate challenge is accepting the human condition
Soros's life arc bends from godlike detachment toward human connection—and it is not clear that he ever fully made the turn. "By having these foundations, I was sort of able to play God," he admitted. "If I become an investor, I come down to earth. I'm just a player." The ultimate challenge, he said, was "to accept the human condition."
For a man who survived the Holocaust by pretending to be someone else, who built a fortune by observing markets from a position of emotional detachment, who spent billions trying to reshape the world according to his vision of open society—accepting the ordinary limitations of being human may have been the one bet he was never fully willing to make.
Tactic: Recognize that the drive to transcend your circumstances—to operate above the fray, to be the observer rather than the participant—is both the source of extraordinary achievement and the barrier to the most fundamental human satisfactions. The challenge is not to choose between them but to hold both.
In their words
Our inherently imperfect understanding helps shape the reality in which we live.
I harbored messianic illusions—what I describe as a sense of myself as superhuman—since childhood. It was a bit of a guilty secret until I became successful, because it was incongruous—this little schnook in New York!
I know I'm not what I'm cracked up to be. I'm not really as much of a philanthropist as the amount of money would suggest. It's only because I don't care about money that I give it away!
I think the reason I am so interested in revealing myself is that I am trying to find out who I am. It's a process of self-creation, not just self-revelation. I don't know who I am, and I am finding it out.
The excellence of his judgments about markets exceeds by a comfortable margin his judgments about people. He has never made money by discovering the company that became a great success but, rather, by discovering markets—which are not personal.
Maxims
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Perception is not passive. Your understanding of the world doesn't just describe reality—it shapes it, and this feedback loop is the most exploitable phenomenon in markets and politics alike.
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Speed of correction beats accuracy of prediction. The investor who recognizes and exits mistakes fastest will outperform the one who predicts best but holds too long.
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Vacuums are the highest-return environments. Whether in emerging markets or post-Communist societies, the greatest impact per dollar is achieved where no one else has arrived yet.
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Leverage amplifies both insight and error. Use it aggressively when conviction is high and the mechanism for rapid unwinding is clear. Otherwise, it will destroy you.
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Detachment is a tool, not a personality. The capacity to observe yourself from outside is indispensable for clear thinking, but it must be deliberately set aside when human connection is what the situation demands.
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Institutions decay toward self-service. Design organizations with the assumption that they will be corrupted, and build in mechanisms—time limits, external oversight, forced dissolution—to prevent it.
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Contrarianism is a starting point, not a conclusion. Going against the consensus is only valuable when your contrarian thesis is independently validated. Reflexive opposition is its own form of herd behavior.
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Reputation is an asset class. Manage it with the same rigor you bring to a portfolio—voluntarily disclosing losses to build credibility, timing generosity to counterbalance aggression.
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The particular and the universal are not enemies. The impulse to escape tribal identity through universal principles is powerful and often productive, but it can also be a sophisticated form of evasion.
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The human condition is the final trade. After all the wealth, all the influence, all the foundations—the hardest position to take is the one that requires you to come down to earth and accept that you are, in the end, just a player.
