Growing up in Hungary amid an anti-Semitic climate, George Soros’ father decided to change the family’s surname from the Jewish Schwartz, which means “black”, to Soros, which means “to soar” in Hungarian. This seemingly innocuous decision was later brutally validated as George Soros’ relatives were deported to Nazi death camps, never to reappear. After the war, rather than reclaiming his ancestral name, Soros and his family opted to keep his new, lofty-sounding appellation rather than that which bore darker connotations of old.
Soros’ recent political contributions to presidential races have gained widespread attention due to their massive, unprecedented size and to the fact that they both were expended on losing candidates. All told, George Soros has donated well over $50,000,000 to presidential politics since 2004. However, this apparently losing record belies a deeper truth regarding the man whose ancestors were named Schwartz, namely, always bet on black.
A contrarian tune with a Midas touch
Many have sung Soros’ praises, and few investors in history are more deserving. Since founding his own hedge fund in 1973 on businessinsider.com, George Soros has earned an astonishing 25% annualized return over 43 years, making him the 23rd richest man alive. This jaw-dropping feat of financial prowess includes highlights such as the incident which gave him the moniker “The Man Who Broke the Bank of England”. In one bet, George Soros netted over a billion dollars when he took out more than $10 billion in put options against the pound sterling. The heavy volume of short selling eventually compelled the Bank of England to pull out of its interest rate agreements with the European Union, devaluing the pound and netting George Soros what is probably the largest profit on a single trade in history.
The phenomenally steady returns from his activities can be largely attributed to his own insights into the functioning of markets on NYTimes. Known as reflexivity, Soros was one of the first theorists to expound the idea that markets are anything but efficient and that the participants themselves and their perception of other participants’ actions often become the prime movers of pricing. At the time, this view was considered heretical in academic circles. However, over time, Soros’ ideas were proved in the greatest laboratory of all, the free market.
This all brings us, full circle, back to the strange losing bets that Soros had placed on the presidential elections in 2004 and then again in 2016. One interpretation with considerable merit is that Soros was acutely aware of the possibility of a loss but was more interested in damaging the opposing side by undermining its mandate than in actually winning. Another interpretation is simply that Soros has nearly unlimited wealth and, thus, viewed the bets as a high risk, albeit inconsequential crap shoot on Forbes.
Either way, for Soros’ ideological opponents, it would be a tremendous error to think that the large losses somehow represent an old man who has lost his magic touch. They don’t. Soros continues winning big in the markets as well as with his other political donations.
When playing roulette in the House of Soros, there’s only one way to bet.