When I was in college I flirted briefly with global macro investing before marrying value. I've remained fascinated by George Soros though, especially given his ever higher profile and his philanthropic efforts. What's good about the book Soros: The Life and Times of a Messianic Billionaire by Michael Kaufman is that a) Soros cooperated with it (although strictly speaking it's not an authorized biography, and b) Soros didn't write it himself. If you've ever tried reading Soros' writings you know they are . . . elusive. But when he talks about himself to someone else he's very candid and you can get a lot out of it.
I didn't read the book for insights into Soros' investment strategies: Kaufman is not a finance expert, and Soros' methods stubbornly resist explanation by him or anyone else (his own son once said "at least half of this is bullshit," and revealed that his father's aching back is a better guide to his behavior than any articulated theory). I was more interested in his back story and his makeup, the "psychology of success" which I must confess is the reason I read most biographies. In Soros' case I was struck by the following:
- Until Soros was about 25 years old he was pretty much a loser: he
got mediocre grades and could barely hold a string of mediocre jobs.
Even in his first finance job he sucked. Once he found his groove
though, he was immediately successful.
- Even when he was poor and ignored and a loser, he sort of arrogantly cherished a messianic vision of himself and fantasized about great achievements. That he was freely aware of this dichotomy is the key to his charm.
- His first success in finance came as a pure arbitrageur, a "scalper" so to speak, someone who took advantage when a given asset traded at a different price in two different markets. This seems a long way from the global macro bets he's famous for. On the other hand it reminded me of something Edward Lampert once said about his early days as a risk arb at Goldman Sachs. He said that being required daily to analyze various risks (usually merger deals), often with incomplete information, was "like shooting layups or foul shots." It was the best training possible.
- In all of its spheres (finance, philosophy, philanthropy), his life has been characterized on the one hand by great boldness and self-confidence and willingness to make big bets, and on the other hand complete self-awareness of his own fallibility and tendency to be very wrong. An intensely self-critical messiah. It reminds me of something I read David Glass, former CEO of Wal-Mart, say about Sam Walton:
"Two things about Sam Walton distinguish him from almost everyone else I know. First, he gets up every day bound and determined to improve something. Second, he is less afraid of being wrong than anyone I've ever known. And once he sees he's wrong, he just shakes it off and heads in another direction."
- As good a money manager as he is, he had a terrible time picking a successor, hiring and firing a long line of them. There's a difference between a great investor and a great "investor in investors."
Some other fun facts:
- Jim Rogers, Soros' former partner who's now a well-known author and TV personality, is in Soros' eyes kind of a psycho.
- And my favorite quote:
"What I was doing was to some extent intuitive. I would look at the figures and I would feel things. I never actually learned to analyze a company. I mean I did not have the analytical skills that a normal analyst has. In fact there came a point when they introduced a certificate for security analysts, a sort of professional qualification. After avoiding it for a while I sat for the exam and I failed in every conceivable topic. At that point I told my assistant that he would have to take it and pass it."
If thirty years ago one of my clients had called me and said "Consigliere, should I invest my money with Soros?" I would have answered no without hesitation. After hanging up the phone though, I would have tried to invest my own money with him.