How Did George Soros Make His Money?

Depending on your perspective, you probably view George Soros as a brilliant money manager or a dangerous speculator.

Regardless, the Hungary-born Holocaust survivor has amassed a fortune and given billions of dollars away.

But how did Soros make his fortune in the first place?

How Did George Soros Make Most of His Money?

George Soros has made most of his money as an investor with a keen eye for asset bubbles and value discrepancies.

While his investment profile has usually included traditional asset classes and run-of-the-mill bullish investments, he also bets against stocks and the markets by going short securities with perceived inflated values.

His “breaking” the Bank of England is the most popular example of Soros making money by shorting an asset – in that case, the British pound.

Soros started his career working in various positions at merchant banks in London and New York City. While working at Arnhold and S. Bleichroeder, he used $100,000 of the firm’s money to experiment with trading strategies.

A few years later, he used $4 million to create the Double Eagle hedge fund. The fund grew rapidly and provided money for him to found Soros Fund Management.

What Was George Soros Trading Strategy?

George Soros’s trading strategy has historically capitalized on volatility in global markets.

He takes an approach that is, in many ways, contrarian to Warren Buffett’s long-term investment strategy. Instead of investing in companies that he believes will have strong futures, Soros buys and sells stock according to how much money it will earn as fast as possible.

Some people criticize Soros’ trading strategy because it could contribute to market fluctuations that disrupt the global economy, such as the time he broke the Bank of England.

A smaller investor following such a speculative plan would have little influence on the market. Soros, however, is one of the world’s top money managers, with over $25 billion in assets under his control. When someone with that much financial interest makes a major move, it can send ripple effects through the market.

Not all of Soros’s trading relies on earning money on short-term speculative trades. Historically, his fund has considered the ethical implications of investing in certain companies. For example, the fund announced that it would sell its shares in Palantir Technologies (NYSE:PLTR) in 2020 because it disagrees with the company’s objectives and business practices.

A spokesperson from Soros Fund Management said the company didn’t understand the negative social implications of big data analytics when it purchased shares of Palantir.

Soros Fund Management has also tried to maximize its profits by avoiding government interference. In 2011, SFM announced that it would switch from a hedge fund to a family office. Changing the business structure meant that the company could avoid reporting requirements established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Restructuring as a family office meant SFM couldn’t accept investors anymore. It returned about $4 billion to existing investors during the restructuring.

How Much Money Does Soros Manage?

George Soros and his team at Soros Fund Management oversee about $25 billion in assets.

How George Soros Broke The Bank of England

George Soros trades more than stock. He also trades currencies to profit from fluctuating exchange rates. This strategy brought him head-to-head with the Bank of England in 1992. The details deserve some backstory, though.

In 1979, several European countries created the European Exchange Rate Mechanism (ERM) to help stabilize exchange rates between the continent’s countries. A couple of decades later, this action would result in the euro, which standardized currency throughout most of Europe.

The European ERM would stabilize currencies by fixing them to the German mark. The mark was seen as the most stable currency in Europe at the time, so it made sense to many economists that countries would pin their independent currencies to Germany’s money.

Britain declined to join the ERM because it believed in the power of the British pound. It wanted to remain independent instead of connecting the pound to the mark.

Britain changed its position in 1990 under the direction of Margaret Thatcher. The prime minister hoped that joining the ERM would make it easier for Britain to do business with other European countries.

Several high-ranking members of the government also thought that joining the ERM would help reduce inflation and interest rates, which would contribute to the country’s economic prosperity.

Thatcher made several serious miscalculations by joining the ERM in 1990. Germany had recently unified, sending much of Europe’s economy into chaos as East and West tried to rebuild.

Additionally, the mark had a high exchange rate compared to the pound. By joining the ERM at this time, Britain had to maintain high interest rates.

Soros saw these and other mistakes, so he bet against the pound as England increased its interest rates. He used a short position to sell pounds with the option to rebuy them later at a lower price.

By 1992, Soros had a $1 billion position against the pound’s success. Britain tried to stabilize the pound by raising interest rates even higher and purchasing pounds from Soros and other investors.

On September 16, 1992, England couldn’t hold its position any longer, so it chose to withdraw from the ERM. As a result, the pound’s value plummeted. Soros earned an estimated $1 billion when he used his short position to buy pounds at a lower rate.

The Bank of England survived, but the events shaped the country’s interactions with continental Europe. The economy suffered so much for a while that it could have contributed to Britain’s refusal to use the euro. Long-standing sentiments might have also strengthened England’s decision to leave the European Union.

Was George Soros Stanley Druckenmiller’s Boss?

Yes, Stanley Druckenmiller worked for George Soros’s hedge fund, Quantum Fund, from 1988 to 2000.

Both managers are believed to follow similar investment strategies.

What Investments Does George Soros Own?

George Soros oversees about $25 billion in assets through Soros Fund Management, LLC. The company’s portfolio likely contains dozens or even hundreds of assets.

Some of its top investments include:

• 4.19 million shares of Rivian Automotive Inc (RIVN)
• 3.17 million shares of iShares iBoxx Investment Grade Corporate Bond ETF (LQD)
• 3.29 million shares of Horizon Therapeutics (HZNP)
• 1.43 million shares of Alphabet Inc (GOOGL)
• 1.39 million shares of Liberty Broadband Corp (LBRDK)

These companies make up a core of Soros’s investments. While SFM makes money from market volatility, it also holds core companies with long-term value potential.

Does George Soros Own Home Depot?

George Soros does not own Home Depot, which is a publicly traded company partially owned by millions of people. However, he has bought and sold shares of Home Depot since at least 2000.

In 2000, Soros reportedly bought more than one million Home Depot shares. Two years later, he purchased about 1.3 million shares. He acquired larger stakes in the company in 2008 and 2009.

Since 2009, Soros has bought and sold Home Depot shares depending on their performance. For instance, he acquired about 50,000 shares in Q2 2013 but then sold approximately the same number of shares in Q3 2013.

Soros ended his interest in Home Depot during the last two quarters of 2015 when he sold his remaining shares.

What Is the Open Society Concept?

The open society concept is an anti-authoritarian position that tries to accept diverse people rather than divide them into distinct groups or “tribes.”

The approach relies on laws and institutions that help retain peace even when people disagree with each other. By nature, open societies are democratic, giving citizens control over their governments and personal lives.

Soros and his family founded the Open Society Foundation to support building more equitable economies worldwide. He has donated about $32 billion to the foundation.

Does George Soros Have Any Children?

George Soros has five children. He had three children (Robert Daniel Soros, Andrea Soros Colombel, and Jonathan Tivadar Soros) with his first wife, Annaliese Witschyak. The couple was married from 1960 to their divorce in 1983.

His other two children (Gregory James Soros and Alexander Soros) come from his relationship with Susan Weber. The couple was married from 1983 to their divorce in 2005.

Many of his children have used their social influence and wealth to build impressive careers. For example, Robert founded Central European University (CEU).

Andrea founded the Trace Foundation to help Tibetan communities in China and co-founded the Acumen Fund to fund projects that address issues related to poverty.

Alexander chairs the Open Society Foundation and was designated a Young Global Leader by the World Economic Forum in 2018.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.