The Open-up Gambler

Michael T Kaufman, a veteran journalist who has worked for forty years with The New York Times, has penned a biography that will interest anyone keen on learning about the life of the hedge fund manager known to the world as "the man who broke the Bank of England".

The incident that made him (in)famous occurred in 1992. At that time, the British pound was governed by an exchange rate mechanism under which the government allowed its value to fluctuate only within a narrow band vis-à-vis the German mark.

Soros calculated that it was no longer tenable for the pound to trade within these limits, and that the British government would have to devalue it.

He took a huge bet on behalf of his fund. John Major's government avowed that the pound would not be devalued, but after spending a fortune in taxpayers' money shoring up the pound, it had to give in to the inevitable.

Soros's pickings from that one bet""one billion dollars.

Closer home, during the 1997 East Asian crisis, Malaysian strongman Mahathir Mohammad ranted against Soros for having speculated against the Malaysian currency, the ringgit.

Soros, now above 70, was essentially a hedge fund manager. Hedge funds are different from mutual funds, in that they engage in a greater variety of trading.

They are also subject to fewer regulations, the US regulator""the SEC""having taken the position that those who invest in these funds are rich, and smart enough, to look after their own interests.

The first part of the book recounts Soros's early childhood, spent in his native Hungary, which was occupied by Nazi Germany.

George and his Jewish family escaped deportation, and certain death, by forging documents, posing as Christians, and spending most of their time in hiding.

Towards the end of the Second World War, Communist Russia beat back the Nazis. Then, as the Iron Curtain began descending over Europe, Soros escaped via Switzerland to England.

In England Soros attended the London School of Economics. But those were difficult and lonely years. He was without money and without family, and had to take up odd jobs to make his way through college.

In 1956 Soros shifted to America, where he worked for several Wall Street firms. Soon he rose to become the manager of a fund, the Eagle Fund, and later of a second fund, Double Eagle.

In 1973 he founded his own hedge fund""Soros Fund (later called Quantum Fund). By 1998 the value of this fund stood at a humongous $6 billion.

Soros's fame, however, does not rest on his being one of the finest money managers of the last century, alone. From the 1980s, Soros's interest turned to philanthropy.

As the Communist system went into decline, Soros sensed the opportunities and funnelled his vast riches to dissident groups in Eastern Europe who were trying to promote democracy.

Between 1994 and 2000, Soros's contributions to his philanthropic activities, which were run under the name of the Open Society Institute, amounted to $2.5 billion.

What distinguishes Soros as a philanthropist is that he doesn't just contribute money, but takes an active interest in the activities of his foundations.

If he finds that bureaucratic sloth has set it in, or that a project has not yielded the desired results, he shuts it down with the same ruthlessness that made him a great investor.

Finally, what were the attributes that made Soros one of the greatest money managers of this age? According to Kaufman, a lot of people understand economics and finance, and can divine where the opportunities for money making lie.

But it takes raw courage to put everything on the line on your view of how things will pan out. For instance, in betting against the pound, Soros's lieutenant at his fund had bet only two or three billion.

It was Soros who urged him to up the ante""to triple the original amount.

If you are looking for detailed tips on investing, you may be a trifle disappointed. For that, books on Buffett, or Peter Lynch's own books would serve you better.

But if you want to learn about one of the remarkable figures of our age, and about the historical events that shaped Europe, and Soros, during the last century, you will find this an engrossing read.

SOROS
THE LIFE & TIMES OF A MESSIANIC BILLIONAIRE

Michael T Kaufman
Vintage Books
Price: $10;
Pages: 324