The Econophysics Blog

This blog is dedicated to exploring the application of quantiative tools from mathematics, physics, and other natural sciences to issues in finance, economics, and the social sciences. The focus of this blog will be on tools, methodology, and logic. This blog will also occasionally delve into philosophical issues surrounding quantitative finance and quantitative social science.

Sunday, August 06, 2006

Soros Has Lunch with the FT

This weekend's Financial Times has an interview with legend (aka "the man who broke the Bank of England") in its 'Arts & Weekend' section (August 5, 2006): The billion-dollar memory lapse. Soros talks about his philantrophic work, his life story, and -- the famous philsopher who has served as a major intellectual influence for Soros ever since his student days at the London School of Economics (where Popper taught for many years). Soros avoided talking too much about his successes in investing ... even playfully feigning amnesia about "Black Wednesday" ... although he suggests his theory of "reflexivity" -- the interaction between misconception and reality -- somehow led to his great fortune.

The FT article had the following tidbits about Soros' days as a trader (as opposed to his status as a "stateless statesman"):
Soros, however, is in a different league - so engagingly Olympian that he affects absent-mindedness about his greatest coup - Black Wednesday, September 16 1992. That day, when Soros successfully bet the British pound would be devalued, broke John Major's government, led to the election of the Labour party and entered political folklore as an unforgettable date. But not, it seems, to the man who made the most money out of it.

"Was it Wednesday?" he asks. "It was Thursday, I think."

"Wednesday," I confirm. "Definitely Wednesday."

"Was it?" he asks again, seeming to distance himself from his former self.

....

But it is for making money that he is best known. Stories abound about Soros the financier - about how he lost millions in Russia and Japan, about how he always wanted to raise the stakes. His $1bn profit on Black Wednesday, for example, came because he had bet $10bn. Investing also brought him pain - because of his fear of losing what he had risked. Despite all of Soros's talk of reflexivity, he admits he often sensed trouble with his investments because of an ache in his back.

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