How did George Soros gain his wealth?

George Soros made his money by investing in securities, buying investment assets, and speculating in the Forex market. His knowledge of the market laws and his ability to predict the movements of exchange rates enabled Soros to successfully manage investment funds. The financier established his first hedge-fund Double Eagle in 1969. His profits from managing financial assets formed the basis of the Soros Fund Management fund opened in 1973. In 1978, Double Eagle changed its name to Quantum Fund, and Soros consulted its management on investment decisions.

In many ways, Soros' capital was created at the expense of speculations in the Forex market. In 1992, he made a legendary deal to sell the British pound, which brought in more than a billion dollars in profits for the day. The decision was based on the forecast made by Soros that Britain would leave the European exchange rate mechanism, which had a negative impact on the quotation of the national currency. This deal was called "Hacking the Bank of England".

How did George Soros "hack" the Bank of England?

On September 16, 1992, George Soros made history by hacking the Bank of England. He managed to make the largest transaction, selling uncovered pounds sterling worth $10 billion. To do this, the businessman borrowed funds in British currency and converted them into German marks. Soros bet on the depreciation of the pound as a result of political decisions. His forecast was correct; the pound lost a significant part of its value, and at the end of the day the investor's fortune increased by one billion dollars.

The value of the pound was artificially inflated because Britain was part of the European Exchange Rate Mechanism (ERM). George Soros was convinced that Britain would have to leave the ERM because high-interest rates were having a negative impact on the economy.

He was right, and the U.K. did exit the ERM, causing the value of the pound to plummet. To stop the fall in the exchange rate, the Bank of England decided to raise interest rates. However, this action only deepened the recession in the UK financial sector.

Since the currency was in freefall, Soros decided to buy pounds, which further reduced their value. The Bank of England abandoned the fixed exchange rate, and the pound collapsed against the other major currencies. With his experience and bold investment decisions, the financier managed to "hack" the Bank of England and increase his capital manifold in a short time.

The size of George Soros' fortune in 2022

According to Forbes, George Soros' net worth was $8.6 billion as of May 2022. He owns stakes in securities and other investment assets and is on the management team of leading hedge funds. He is not afraid of taking part in risky projects and investing in risky investments. In doing so, the investor adheres to asset diversification rules - his investment portfolios combine risky and protective assets with different ratios of profitability to risk.

In the next article, we will look into the question of what is George Soros' trading strategy.
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