(3 of 3)
There have been risky times and breathtaking losses along the way. Although Soros predicted the 1987 stock-market crash, he lost $800 million by mistiming his withdrawal from the market. That hit, which wiped out close to a third of Quantum's book value at the time, persuaded Soros, who by then was increasingly committed to foundation work, to step back from day-to-day fund management and focus on the broader investment picture. "The crash was an indicator that I could not do two things at once," he concedes. Yet being detached from the daily battle has its drawbacks. Last January, for example, one of his top advisers paid a $640,000 fine to settle charges brought by the U.S. Securities and Exchange Commission, which claimed he had profited from inside information. Although Soros was not involved in the case, he is known to challenge his employees to act aggressively. Soros once asked one of his traders, who was confident of a market move, how much he was willing to commit. When the man answered, "$1 billion," Soros responded dismissively, "You call that a position?"
Despite his talent for trading, Soros has always seen himself more as a thinker than as a money earner, and claims his foundation work "has brought me closer to realizing a real sense of satisfaction than making large amounts of money." His father's experience of losing a lucrative legal business during the war but living well nonetheless provides insight for Soros. "Part of what I learned was the futility of making money for money's sake," he says. "Wealth can be a dead weight."
Only the truly rich can afford statements like that, and fortunately Soros is not about to apply his theories on wealth to the struggling economies of Eastern Europe and Russia where, he fears, the future hangs in the balance. "A traditional market dynamic is that after a crash there is a rebound," he explains. "Right now I see a crash with no bound." Still he remains optimistic, despite the obstacles to creating truly democratic free-market societies in the near future. Rather than backing off, he is stepping up the pressure, urging governments in the West to provide a $10 billion safety net for the unemployed and working poor of the former Soviet Union. He is also planning to add more of his own money. "What is at stake," he says simply, "is the future of civilization."
To other observers, the East may be the apotheosis of Heisenberg's theories of uncertainty; to Soros the Speculator it is the land of opportunity. "The worse a situation becomes, the less it takes to turn it around," he observes, adding with the logic of the consummate trader, "the bigger the upside." It is a quantum leap he is prepared to take.
CHART: NOT AVAILABLE
CREDIT: TIME Chart
CAPTION: GOLD PRICES