Soros on Soros: Staying Ahead of the Curve

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slug: soros-on-soros-1995 year: 1995 title: "Soros on Soros: Staying Ahead of the Curve" source: https://openlibrary.org/works/OL1993772W type: book

Published 1995 by John Wiley & Sons, New York (x + 326 pp., ISBN 0-471-12014-6 cloth). The book is an extended interview in three parts: Byron Wien questions Soros on investing and philosophy, Krisztina Koenen on geopolitics and philanthropy; it grew out of a long German-language interview Koenen conducted for the Frankfurter Allgemeine Zeitung, which Soros reworked, in his words, "until it became like a Socratic dialogue." The full text is not reproduced here; this entry provides a chapter-by-chapter synopsis of its structure and arguments, with a small number of short verbatim passages located via Google Books (page numbers in parentheses).

Overview

Soros on Soros is the closest thing Soros produced to an autobiography, and the missing investment-side counterpart to The Alchemy of Finance in this knowledge base. Where the Alchemy is a treatise with a trading diary attached, Soros on Soros is the life and the method in conversation: the formation of the investor, the full history of Quantum Fund, the theory of reflexivity in plain speech, and the most detailed first-person account Soros ever gave of the sterling trade of 1992. In his Preface (July 1995) he called the book "a summing up of my life's work," and dedicated it "to all the people, in and out of my foundation network, who are working to create an open society."

The book's three parts map onto the three identities he spent a career trying to unify: the investor, the philanthropist-statesman, and the philosopher. For this knowledge base, Part One and Part Three are the primary investment texts: they contain the fullest accounts of the Jim Rogers partnership, the handover to Stanley Druckenmiller, and the application of reflexivity to live markets.

Part One: Investing and Global Finance — with Byron Wien

Chapter 1 — The Investor

The opening chapter establishes Soros's self-portrait as an investor, beginning with the Wall Street joke that opposite Mount Rushmore there should be a mountain of the greatest fund managers — on which he places himself alongside Warren Buffett. He disclaims any fixed method:

"My peculiarity is that I don't have a particular style of investing or, more exactly, I try to change my style to fit the conditions." (p. 10)

On risk measurement he is deliberately anti-technical — "People who are in the derivative business have very elaborate risk calculations. We are amateurs. We live in the Stone Age. Deliberately so." (p. 5) — and on markets he inverts the prevailing wisdom: "The prevailing wisdom is that markets are always right. I take the opposite position. I assume that markets are always wrong." (p. 12) The chapter covers derivatives and leverage, his claim to running "the first hedge fund," intuition as an investment tool (the famous backache as portfolio signal, p. 21), character as the differentiator among equally intelligent investors ("Some go to the brink but never go over, and others go to the brink and occasionally go over," p. 14), and the daily working relationship with Druckenmiller — including Soros's explicit assignment of credit for the sterling trade: asked whether Druckenmiller should be given the credit generally assigned to Soros, he answers "Yes. I never claimed credit," describing his own role as the coach who said "this is a once-in-a-lifetime opportunity, the risk-reward relationship is extremely favourable, and therefore we should play it on a larger scale than normal… I advised him to go for the jugular." (pp. 21–22)

Chapter 2 — The Guru in Training

The formation narrative: the Budapest childhood, the decisive influence of his father, survival under the Nazi occupation of 1944 with a false identity, the journey to England in 1947, poverty in London, and the London School of Economics. The Karl Popper relationship is defined precisely — Soros was influenced by Popper's writing and thought rather than by personal contact (p. 33). The chapter follows him into the City in 1953, to New York in 1956 as an international arbitrageur, through the destruction of his arbitrage business by the interest equalization tax, the abandoned philosophy treatise ("The Burden of Consciousness," 1961–62), and the Arnhold & S. Bleichroeder years that ended with his going independent in 1973.

Chapter 3 — The Story of Quantum Fund

The institutional history, told from the inside: the Double Eagle Fund started in 1969 with $4 million, renamed Soros Fund around 1973 with about $12 million. The Jim Rogers partnership gets its fullest treatment anywhere in Soros's published record — the division of labor (Soros the decision-maker, Rogers the analyst), the early research campaigns, and the breakup: Soros wanted to bring in new blood and build an institution; Rogers refused to share the firm with outsiders; they split in 1980. What followed was the crisis year of 1981 — the fund's near-death and Soros's own life crisis, worked through with the help of psychotherapy. The recovery runs through the Plaza Accord coup of 1985 ("go for the jugular… paid off handsomely"), the Black Monday setback of 1987, and the succession: Druckenmiller sought Soros out after reading The Alchemy of Finance, worked part-time while still at Dreyfus, and was gradually handed the fund.

Chapter 4 — The Theory of Investing

The compact statement of reflexivity for a general reader: the mainstream assumptions of equilibrium and perfect knowledge are false; participants' thinking affects the markets they think about, and markets in turn affect the fundamentals — producing far-from-equilibrium conditions and boom/bust sequences. "The main idea is that our understanding of the world in which we live is inherently imperfect. The situations we need to understand in order to reach our decisions are actually affected by those decisions." The chapter opens (p. 66) with a notable external endorsement: Paul Tudor Jones requires his new employees to read The Alchemy of Finance before they start trading.

Chapter 5 — Theory in Action

The applied chapter, and the book's investment core. The sterling crisis is reconstructed as a case study in reflexive regimes: every exchange-rate regime is flawed; German reunification made the ERM's latent flaw blatant, because the high German interest-rate policy "was totally inappropriate to the conditions that prevailed in England," throwing a near-equilibrium system into dynamic disequilibrium. Soros describes shorting the lira first as a cushion, the now-famous exchange with Bundesbank president Schlesinger — asked whether he liked the ECU, Schlesinger said he liked it as a concept but would have preferred it called the mark: "I got the message" — and his answer to the moral question about speculation: the fault lies with those who set the rules, not those who play by them. The chapter ranges on to the Japanese bubble and its collapse, the Mexican peso crisis of 1994–95 and his rescue proposal, Brazil, the dollar-based international monetary system, and derivatives regulation (he cites Volcker on volatility and proposes registration of derivative instruments with the BIS).

Part Two: Geopolitics, Philanthropy, and Global Change — with Krisztina Koenen

Chapter 6 — The Philanthropist

Why he gives: not guilt but purpose. The chapter covers the principles of the foundation network — anonymous giving where possible, "lean and clean" governance, philanthropy with a policy purpose — and its flagship campaigns: the Hungarian photocopier project that broke the state monopoly on information, support for dissidents across Eastern Europe, South Africa, and the founding of Central European University. He discusses his rule of not investing in countries where his foundations operated — and his later reversal of that rule.

Chapter 7 — The Stateless Statesman

The post-1989 settlement in Eastern Europe and the former Soviet Union as Soros diagnosed it in real time: Russia's descent into "robber capitalism" and mafia rule, the war in Chechnya, his criticism of the Gaidar shock reforms, Poland as the relative model, and the futures of Ukraine and Macedonia. This is the direct precursor of the political writings that dominate the later corpus (see Who Lost Russia?, 2000).

Chapter 8 — The Future of the United States and Open Society

The weakest-documented chapter in secondary coverage. Its theme is the open society's problem at home: America as an open society that lacks cohesion and is "unlikely to rise to the defense of open society" — the anxiety that would drive Soros's American political engagement in the 2000s.

Part Three: Philosophy — with Byron Wien

Chapter 9 — The Failed Philosopher

The philosophical summation: fallibility as the human condition; why participants cannot act on the basis of knowledge, only of belief; the liar's paradox and flawed mental constructs; reflexivity as the wrench in deterministic prediction, with Heisenberg's uncertainty principle as the admitted (and imperfect) analogy. Soros defends the "alchemy" of his first book's title: incantations can influence the people whose decisions shape events. The open society emerges as the universal concept that unites his epistemology and his politics.

Chapter 10 — The Power and the Myth

The closing self-assessment, opened on his twenty-five-year friendship with Wien: power and its myths, the anti-Semitic conspiracy theories that attach to his name, his access to policy-makers, the press's hostility, and the self-description that became his epitaph for the book: "As a stateless statesman, I occupy the opposite position: I have only principles, no interests. That is what gives me my authority." (p. 244) He closes by saying this is the last time he will dig so deeply into himself.

Appendix: Selected Writings

The book closes with three essays republished in full: "Open and Closed Societies," "Prospect for European Disintegration," and "Hedge Funds and Dynamic Hedging" — the last being his most technical public statement on hedge-fund mechanics and the dynamic-hedging critique, and a primary source for the 1994 Congressional testimony debate on hedge funds.

A Note on Attribution

The most-quoted line in the Soros literature — "It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong" — is not in this book (verified by full-text search). It is Stanley Druckenmiller's account, in Jack Schwager's The New Market Wizards, of the lesson he took from Soros. Secondary sources frequently misattribute it to Soros on Soros; this knowledge base follows the documentary record.

Significance within the Corpus

Soros on Soros supplies what the 212 writings in this knowledge base largely lack: the investment craft in Soros's own voice. The Quantum Fund history (Chapter 3) is the primary source for the Jim Rogers partnership and the Druckenmiller succession; Chapter 5 is the canonical sterling-crisis account alongside The Alchemy of Finance; the Appendix essay on hedge funds connects directly to his 2008 Congressional testimony. Publication details verified against Stanford SearchWorks, OpenLibrary (work OL1993772W), and Kirkus Reviews; chapter structure per the Nielsen Book Data table of contents.