How Did George Soros Make His Money? (Explained)
George Soros is a multi-billionaire investor and philanthropist who has given away a majority of the money he has made over the long course of his career.
According to Forbes, he is the 288th wealthiest person in the world currently.
Seeing how successful George Soros has become is even more amazing when you consider that he was from a Jewish family who lived through Nazis seizing control of Hungary.
How Did George Soros Make His Money?
George Soros is an extremely successful hedge fund manager and the chair of Soros Fund Management LLC.
Soros started his working career as a railway porter and waiter while he put himself through school at the London School of Economics.
After graduating from the London School of Economics with Bachelor’s and Master of Science degrees, Soros began taking different banking jobs.
He started his first hedge fund called Double Eagle in 1969.
He then used the profit he made from Double Eagle to fund his next hedge fund the following year.
In 1973, he started the Soros Fund.
During this time, George Soros foresaw the crash of the stock market in 1987.
This along with other daring moves allowed his funds to grow quickly.
In 1992, Soros saw that the British pound sterling was losing value quickly, so he began selling billions of pounds that he had bought with borrowed money before the drop in value.
After the pound had been devalued, he bought back the pounds he sold, repaid the money he owed, and made about $1 billion.
During the early days of the internet in 1999, Soros made a fair bit of money that he had lost in previous years.
However, after 2000, he began to invest more conservatively.
The technology implosion brought too many uncertainties to the table for Soros.
In 2011, his company Quantum Endowment Fund began only serving him and his family.
These days, Soros prefers to focus on his philanthropic efforts and writing.
Soros has written several books on investing, finances, and even his personal life.
He published his first book in 1987, The Alchemy of Finance.
His most recent book is In Defense of Open Society, published on October 23rd, 2019.
George Soros’s Early Life
George Soros has focused all of his philanthropic efforts toward trying to fight seemingly unwinnable battles and combating problems that seem impossible.
This comes from the hope that he held onto tightly when the Nazis took over his home country of Hungary.
While the murderous and ruthless Nazis were trying to rid the country of all Jewish people, Soros’s family stayed to help keep other Jewish families safe.
They had to forge identity paperwork, change their names, and do everything in their power to conceal their Jewish identities.
During this time, George Soros watched as the Nazis went on their murder spree, which ended with the murders of more than 500,000 Jews in Hungary.
The threat was so much larger than his family could ever dream of ending, but they still did everything in their power to keep as many people safe as they could.
George Soros’s Theory Of Reflexivity
In 1959, George Soros returned to London after going to work for F.M. Mayer and Wertheim & Co.
He had saved $500,000 in order to support himself while he attended school.
It was while he was studying that he expanded on the theory of reflexivity.
Soros had not been the one to create the theory of reflexivity but he modernized and expanded greatly on it.
Soros claimed that there are times when the market will do strange things that give people a different expectation than what may actually be happening and then change accounting.
In economics, it is normally believed that financial expectations will adapt to reality.
The theory of reflexivity believes that reality occasionally adapts to financial expectations.
For years, Soros’s theory had been laughed at and ignored.
In 2008, this theory saved Soros from taking a hard hit, like many others across the world.
Soros was able to use his theory to anticipate the financial crisis.
After this point, people began to take interest in the theory of reflexivity.
Most economists saw how flawed traditional economics were and the theory has grown in popularity.
The odd rule of reflexivity is that it only applies in situations where people are thinking.
The person must be using cognitive function and manipulative functions.
Cognitive function is used to understand the world around you.
Manipulative function is used to impact the world you live in while also pushing your own interests forward.
These two functions can often contradict themselves, which leaves them both without a cause.
Knowledge can be found when cognitive function leaves behind manipulative function.
When people’s personal interests are pushed aside and they are able to take in information as it presents itself, you will find knowledge.
Oftentimes, personal interest can change your perception of a situation.
The Theory Of Fallibility
The theory of reflexivity does not stand independently.
George Soros describes the relationship between the theory of fallibility and the theory of reflexivity as Siamese twins.
They were closely connected, and one could not live without the other.
The theory of fallibility states that humans are bad at comprehension and rational decision-making.
We rely on generalization, compare and contrast, and have strict decision rules and perceptions of morality that we follow closely.
Because we are human, we also misunderstand and misuse our own reasoning tools.
These tools can often make decisions more difficult than they need to be by adding more variables to the equation.
Sometimes, concepts are too large for one person’s brain to handle.
Your brain is taking in millions of bits of information at once when it can only handle seven or eight at a time.
All the information you take in must be crunched down and passed through your brain quickly.
This leads to errors in understanding.
The theory of fallibility recognizes and heavily focuses on the fact that the human brain is flawed.
A flawed brain shouldn’t be given up on.
Instead, you should always be looking for ways to improve.
Once you’ve improved, then you can see all the ways that you were previously mistaken and adjust them.
When applied to economics, this means that our economic system is flawed.
If we don’t keep adjusting it, it will fail.
In the same way that a car that is taken to a mechanic for regular maintenance will work for longer, an economic system that is fixed and adjusted regularly will last longer.
His Philanthropy
George Soros has given away more than $32 billion of his personal wealth.
According to Forbes, his net worth is now $8.6 billion.
With this money, Soros founded the Open Society Foundation and the Central European University in Budapest.
Soros’s giving began well before founding his organization or university.
In 1979, he gave scholarships to black South Americans who were being discriminated against.
The following year, he offered academic visits to the West for Communist Hungary in order to help promote more free speech and expression.
The Open Society Foundation is a human rights organization that fights to help groups of people who face injustice from their country’s government.
Soros saw what discrimination can lead to in 1944 and 1945.
Soros runs the Open Society Foundation alongside his son, Alexander Soros.
The Open Society Foundation also looks to help those who have been pushed to the side by society, such as drug users, prisoners, and sex workers.
Soros’s organization is operating in more than 120 different countries across the world.
In 1989, George Soros founded the Central European University in Budapest.
Soros wanted the focus of his school to be the idea of freedom of speech and critical thinking, two ideas that had been crushed in the once Communist country.
George Soros has also given money to independent organizations.
These organizations include Global Witness, the International Crisis Group, the European Council on Foreign Relations, and the Institute for New Economic Thinking.
All of Soros’s philanthropic efforts are focused on one common trait: fighting what seems to be an impossible battle.
Soros knows the importance of never giving up and holding onto hope, even when your rival or enemy feels so much bigger and stronger than anything you can do.
Hope paired with action is what heals the world.
What Is Open Society?
Philosopher Henri Bergson introduced the idea of Open Society.
Open Society values democracy, freedom, rule of law, human rights, social responsibility, and social justice.
While the ultimate goal of Open Society is impossible, it is also pressed forward by the need for constant improvement.
The concept of a Closed Society is based on the tribalistic needs of people.
It focuses on a monarchy of people who place each other in different positions, typically based on wealth or birthright.
Closed Society tends to be more rigid in an attempt to offer stability.
The teachings of Socrates and Plato are held in high regard to the idea of Open Society.
Socrates pressed his students to think for themselves, not allowing the world around them to determine what they thought or who they were.
The teachings of Socrates made his students harder for the Athenian government to control, so they sentenced him to death.
Plato was a student of Socrates, and he didn’t let his teacher’s death stop him from teaching others.
Plato believed that wisdom was the only thing that was going to save the crumbling Athens.
Through wisdom, people would find respect for education, law, and leadership.
By the 20th Century, Open Society began to truly take shape.
The idea that there was no one person who knew everything arose and increased the need for critical thinking and self-improvement.
Open Society doesn’t believe in having one leader.
Instead, they want to find ways to limit the ability of leaders to cause damage and would rather institutionalize their government.
The key to Open Society is remembering that anything you’re doing now could be wrong, and you need to be able to make the proper adjustments if you are wrong.
It is better to admit to mistakes and self-improve rather than doubling down on a mistake.
George Soros’s Children
Just like their father, all five of George Soros’s children are active members of their community and local society.
They are Alexander Soros, Robert Soros, Gregory Soros, Jonathan Soros, and Andrea Soros Colombel.
Each of them has their own focus in life that they are devoted to.
Andrea Soros Colombel founded Trace, an organization that supports the Tibetan communities while putting a heavy focus on the importance of the Tibetan culture, language, and homelands.
Trace empowers local communities by helping them achieve their needs while also protecting their homelands from deforestation and glacial melt.
Alexander Soros is a writer, philanthropist, and chairman of many organizations.
He is Deputy Chairman of the Open Society Foundation.
He is also a chairman of the International Crisis Group, Global Witness, Libraries Without Borders, and the Central European University.
Alexander is Founding Chairman of Bend the Arc Jewish Action.
Johnathan Soros is the Chief Executive Officer of JS Capital Management LLC.
He is also a board member of the New America Foundation, CARE Enterprises, and the NAACP Legal Defense and Educational Fund.
Both Gregory and Robert Soros are art enthusiasts.
Robert Soros is an art collector and Gregory Soros is an artist.
Unlike their siblings, Gregory and Robert lead slightly more private lives.
Economic Innovator, Thinker, And Giver
George Soros has devoted his life to making the world a better place.
He knows that once everyone has given up, then you have truly lost.
Soros has fought many uphill battles while others had already thrown away hope.
The way Soros has applied philosophy to economics has revolutionized the field of economics.
After putting himself through school multiple times and traveling the world in order to push industries forward, Soros was left incredibly wealthy.
Now that George Soros has been able to live independently, it has allowed him to help those who are discriminated against and save as many lives as he can.
George Soros’s childhood during the Holocaust has always been carried heavily in his heart, and it has led him to never want to see other people suffer the same way he did.
Soros wants to see a better tomorrow for every person.