PRAISE FOR SOROS “This well-written book on Soros’s remarkable career is a must-read. It provides powerful and valuable insights into Soros the investor, philoso- pher, philathropist, political activist, policy advisor, and, most important, the tireless innovator who always seeks to make a difference.” —Mohamed A. El-Erian, co-CEO and co-CIO, PIMCO, and #1 best- selling author of When Markets Collide “He who would be great need contemplate the masters. Investors who want to thrive in today’s volatile markets need to explore the psyches of the world’s greatest investors. Dine with them frequently if you can. If you can’t, the next best thing is to read Soros by Robert Slater. When the market crashes all around you, grab this book, find a quiet spot to curl up, take a deep breath, and see chaos give way to lucidity, and loss to gain.” —Robert E. Wright, curator for the Museum of American Finance, and author of One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe “The concepts George Soros advances are ones that have to be read and thought about. Slater nails it perfectly and captures the Soros character. Anyone serious about business, finance, and the future needs to read this book.” —Robert Dilenschneider, founder of The Dilenschneider Group, and author of Power and Influence “Michael Phelps, Michael Jordan, Tiger Woods, and George Soros—the great Jedi master of risk-taking. In his compelling, lucid, engaging, straightforward, and highly relevant Soros, Robert Slater takes you inside the mind of a global investing genius and delivers priceless, timeless, and peerless insights into Soros’s financial acumen and wide-ranging altruism.” —David Darst, Managing Director and Chief Investment Strategist for Morgan Stanley’s Global Wealth Management division, and author of The Art of Asset Allocation “Robert Slater explores the common thread among George Soros’s many achievements, showing how Soros’s philosophy influenced his investment approach, philanthropy, and politics. The result is a fascinating portrait of a complex, great man.” —Byron Wein,Chief Investment Strategist, Pequot Capital Management SOROS The World’s Most Influential Investor This page intentionally left blank S O R O S The World’s Most Influential Investor ROBERT SLATER New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2009 by Robert Slater. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. ISBN: 978-0-07-160845-9 MHID: 0-07-160845-1 The material in this eBook also appears in the print version of this title: ISBN: 978-0-07-160844-2, MHID: 0-07-160844-3. All trademarks are trademarks of their respective owners. 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This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise. ontents C Preface vii Chapter 1 The World’s Greatest Investor 1 Chapter 2 A Boy and His Parents 17 Chapter 3 The Cellars of Budapest 27 Chapter 4 Like Freud or Einstein 35 Chapter 5 The Blind Leading the Blind 41 Chapter 6 Fascinated by Chaos 47 Chapter 7 Invest First and Investigate Later 59 Chapter 8 Putting My Money Where My Mouth Was 69 Chapter 9 A Quantum Leap 79 Chapter 10 The Identity Crisis 85 Chapter 11 The Imperial Circle 91 Chapter 12 The Killing of a Lifetime 99 Chapter 13 A Philosophical Speculator 109 Chapter 14 A Cheap Price for Freedom 117 Chapter 15 An Urge to Reveal Oneself 135 Chapter 16 The Big Crash 143 v vi Contents Chapter 17 It Takes Courage to Be a Pig 149 Chapter 18 Taming the Snake 157 Chapter 19 The One-Way Bet 167 Chapter 20 Black Wednesday 175 Chapter 21 The King of the Hedge Funds 185 Chapter 22 The Guru 191 Chapter 23 A Common Virus Known as Hubris 199 Chapter 24 I’m a Hungarian Jew 211 Chapter 25 The St. Valentine’s Day Massacre 221 Chapter 26 Mr. Soros Goes to Washington 225 Chapter 27 Richer Than 42 Countries 233 Chapter 28 A Shift Toward America 243 Chapter 29 Financial Woes and a Foretaste of Politics 259 Chapter 30 George Bush in Soros’s Crosshairs 279 Chapter 31 Investor, Philanthropist, Philosopher, and 78 Years Old 297 Notes 319 Index 329 re ace P f G eorge Soros was a vastly different figure in 2008 from the person I researched and wrote about in the mid-1990s in my book SOROS: The Life, Times & Trading Secrets of the World’s Greatest Investor. Back then, Soros was undeniably the world’s greatest investor, and he was becoming a revolutionary kind of finan- cial philanthropist. After SOROS appeared, however, he entered American politics in a big way, seeking to unseat President George Bush in the 2004 presidential election; and he employed his financial philanthropy in whole new ways that gave him even more influence over vast numbers of people. Moreover, in his quest to be recognized first and foremost as a philosopher, he had, since the mid-1990s, writ- ten numerous books spelling out his financial strategies and warning readers about imminent dangers to the global economy. So different had he become, so much better known but still only on the surface, that I concluded I ought to update the book in order to round out this vastly more complicated, more controversial, and more publicly exposed George Soros. When McGraw-Hill and I agreed to produce this revised, updated version of my earlier Soros book, we agreed that I would freshen up the original text where possible and add a number of chapters that summarized Soros’s life and career from 1996 to 2008. When I began that task, I simply assumed that Soros would con- tinue to steer clear of my book project, as he had when the original book was published in 1996. Was I ever wrong! As soon as I began the research for the updated version, I went through what I thought would be the motions of contacting Soros simply to let him know that I was updating my book. I said, naturally enough, that I hoped to be able to vii