Biggs on Finance, Economics, and the Stock Market: Barton's Market Chronicles from the Morgan Stanley Years

Section 4A: Lunches with Luminaries

Investment Alchemy

March 4, 1986

Some investment managers talk as if they own only up stocks and always get the market right. In other words, they lie a lot. I found out that one guy reads the new high list when you ask him on the phone what he owns. George Soros is just the opposite. When we had lunch last week, George, in his usual suave manner, began by describing all the mistakes he had made recently.

Of course, he can afford to be self-deprecating. His offshore fund, Quantum, was up 123 percent last year from $449 million to $1.003 billion, and it has advanced another 25 percent or so in 1986. His long-term record is the best. An investment of $10,000 in Quantum at the fund's inception in 1969 after all fees would be worth $1,640,000 today versus $45,700 if invested in the S&P. The same investment made in 1955 with another international superstar, John Templeton, by the end of last year would have reached a “mere” $632,000.

George grimaces with distaste at any discussion of his wealth or compensation, but Dan Dorfman recently wrote that Soros earned between $100 million and $183 million in 1985. Obviously he had accumulated some capital previously. I figure that both in terms of performance and net worth enhancement, George is the most successful pure investment manager in history.

In spite of his wealth, there is no trace of hubris. George ...