Making Billions: Two Distinct Personalities, Two Contrasting Paths

At first blush, successful investors George Soros and Warren Buffett might seem quite similar to one another. Each has lived a long and productive life (now over 90 years of age)—in fact, they were each born in August 1930! They have stood out as brilliant investors—displaying an interest in money and profit at an early age, finding a suitable niche in the financial sector, weathering the volatility of markets over decades, inspiring others to follow their philosophies and/or invest in their funds; their fans wait attentively for their latest “words of wisdom.” Pertinent to this blog, they exemplify the capacity to synthesize vast amounts of information and bring that synthesis to bear on decisions that, in retrospect, often seem prescient, even wise. 

And yet: once one takes a closer look at their biographies, the facts and contours of their lives, two highly divergent pictures emerge. In a phrase, Buffett emerges as the prodigy who was well launched in childhood and kept on a singular path; Soros, as on a roller coaster that could have gone in multiple directions and whose steering wheel has to be seized and periodically redirected.

Buffet at a Glance 

Buffett’s is the more straightforward life trajectory. Born in Omaha, Nebraska, he has essentially spent his whole life in this less-than-world city. He was a true prodigy in money, finance, profit, mathematical thinking—impressing all who knew him in and outside of school as the person who knew the most about money and markets. He knew that he wanted to be very rich and was determined to reach that goal as an early age. A good but not outstanding student, he did not want to pursue higher education; indeed, he had negative experiences both at University of Pennsylvania, Wharton School of Business and the University of Nebraska. He felt that he was not learning much and not earning nearly as much as he could and should.

He had one transformative experience in life—studying finance with Benjamin Graham at Columbia Business School. Graham introduced him to a seminal idea: the most important consideration in an investment is the value of the company: if (and only if) the value is greater than the current price suggests, should one invest in that company and remain invested over the long haul. Though there were many subtleties in this approach, and both Graham and Buffett occasionally deviated from its tenet, “value” became the central theme—the “through line”—of Buffett’s investment philosophy.

Over the ensuing decades, Buffett (and those who stuck with him) profited handsomely from this philosophy. The arena of his investment changed—once arbitrage, sometimes working in other companies, sometimes centered in his own Berkshire Hathaway fund, involving diverse sectors (from credit cards to airplanes to amusement parks to newspapers). But across time and areas, Buffett became a source of mystery and wonderment to the world of finance on account of his consistently positive investment record. He remained chiefly in Omaha—living a simple life in an ordinary home. To be sure, over time, he ventured forth to different locales (largely in the US) and came to know individuals from many areas of influence—most notably Microsoft head, Bill Gates, with whom he shared interests and whose judgment he trusted. The “Sage of Omaha” fulfilled his boyhood dreams in ways that even he could not have fully anticipated.

Soros at a Glance

For an exact agemate, Soros’ life trajectory could scarcely have been more different from Buffett’s. Born to a comfortable Jewish (though secular) family in Hungary, he was a competent student with a wide range of interests—sports, adventures, boy friends, girl friends. While interested in making money, it was by no means an obsession he might well have ended up a lawyer like his father, or a businessman like several other relatives.

Soros’ life was subjected to total upheaval in the summer of 1944 when the Nazis invaded and occupied Hungary. As non-practicing (but circumcised) Jews, Soros, his father, and his male relatives were at high risk for deportation and probably murder. Soros’ father—well connected and ingenious—was able to disguise his family as Catholics. In the process, young George was assigned a number of highly responsible tasks that helped to save relatives, friends, and persons of means from their otherwise all-but-certain fate.

Having survived this treacherous period, George came to view himself as highly capable and as able to navigate challenges successfully. (Losing money is not so frightening when you and your loved ones have almost lost their lives.) At the age of seventeen, he moved by himself to England and managed to eke out an existence with odd jobs. He could not continue his expected higher education immediately and, unlike Buffett, had no idea what he might do professionally. Thinking—indeed knowing—that he was capable, he became frustrated that his abilities were not even noted—that as a foreigner, he was essentially invisible in post-war England.

Soros’ life was changed by two factors—which pulled him in opposite directions. First, he saw that he had a talent for investment and was able to work successfully in financial firms. Second, having been impressed by the work of Austrian-British philosopher Karl Popper, he was able to study with him at the London School of Economics. Soros was fascinated by the breadth of Popper’s vision—in particular, his advocacy of an “open society” and his conviction that one must subject all theories to testing and reject those that did not stand up to challenge. While Popper had at most a polite interest in young Soros, the eager student became a protege who wanted to emulate the master. 

Not yet thirty, Soros embarked on a life goal. He would make enough money to retire at an early age and then devote the rest of his life to doing philosophy in a Popperian mode.

Of course, it did not work out quite that way! Soros had a brilliant knack for making money—through arbitrage, trading stocks and other commodities, anticipating price-affecting events and acting immediately (most famously, in 1992 making one billion dollars by betting against the British pound.) And even though he largely withdrew from active investment in his later years, he has remained a potent financial force.

But unlike the dogged Buffett, Soros went on to lead three additional lives. First of all, he continued to do and write philosophy. Indeed, despite the lack of interest on the part of the mainstream British-American philosophical communities, he wrote several books and monographs in a philosophical vein. Second, he became a major philanthropist worldwide—starting many organizations and guiding them through opportunities and challenges. Third, building on these strands, he became and has remained an active and vocal participant in worldwide consideration of political issue and personalities—generating both enthusiastic support and vicious criticism…. especially from those authoritarian leaders and groups that are frightened by an open society.

Master Synthesizers 

Both Buffett and Soros are master synthesizers in the world of investment. Though their particular methods and approaches could not be more different—Buffett nearly always in it for the long run, Soros nearly always for the rapid purchase or the equally quick unloading. (A witty formula: Soros, invest, then investigate; Buffett, investigate, then invest.) They have outstanding records, over many decades, on their chosen criteria. Both men claim to have philosophies—Buffett from Graham on value investment, Soros from Popper on reflexivity. But as economist Paul Samuelson quipped many years ago, there is a difference between “talent” and “genius.” 

To be sure, both men study the terrain assiduously. But there’s a powerful intuition at work as well—why this stock, this commodity, this time, this size investment etc. And both have the confidence to act quickly and decisively. And while they have each made injudicious investments—including very big ones—they try to understand them, they do not dwell on them, let alone repeat them. Importantly, they seem relatively emotionless after both victories and defeats, though they obviously crave the former and rue the latter.

So much for the broad sweeps of their remarkable lives. I’ll now make some specific comparisons, underscoring especially the differences, while attempting not to paper over the similarities.

Conditions of Birth  

Both were born right after the start of the great depression. Their families had ups and downs but coped better than most and were quite comfortable financially by the end of the 1930s.

Childhood

Buffett is an unambiguous case of the single-minded prodigy. He loved numbers and statistics, and could store and recall them perfectly (the phrase “photographic memory” was often invoked)—he was attracted to investment, wanted to make money above all else, though exhibited relatively little interest in spending it. Soros was a far more typical secular Jew in a European metropolis with a range of hobbies and interests—by no means specifically oriented toward money or investment. Indeed, he was never a good student in mathematics, while Buffett shone in that discipline. Soros read widely, and was particularly interested in wide-ranging books; he thought that he would one day become a lawyer or journalist.

Families 

In each case, the father seems to have been the dominant figure. Soros’ father Tivador was a modestly successful lawyer and polymath, with a special interest in Esperanto. Having married into a family of wealth, Soros senior helped his in-laws to invest and allocate money. Largely because of the elder Soros’ infidelities, there was tension in the family, though George’s mother admired her husband Tivador’s “can do” attitude. Buffett’s father was a lawyer-businessman, highly ethical and very conservative politically. He eventually ran and won a seat in the US House of Representatives. Buffett’s mother had growing mental health challenges (she was called “neurasthenic”) which caused Warren to turn inward, far more than the gregarious young Soros.

Adolescence

As noted, Soros’ adolescence was life-threatening and life-transforming. Having survived in fascist Hungary, he felt that he could survive anywhere. Unhappy with the family’s move to Washington, young Buffett returned for a time to his native Omaha and lived with his grandparents. Given his family’s social status, he was expected to go to college. But he just wanted an opportunity to make as much money as possible—reminiscent of the youthful chess champion who wants to compete in Grandmaster competitions, or the violinist who craves to perform in Carnegie Hall.

Higher Education  

Their first efforts were not rewarding–indeed both men quit. Neither enjoyed higher education in general, but Buffett valued his menteeship with financial scholar, Benjamin Graham, and Soros was equally grateful to philosopher, Karl Popper. Buffett maintained a close lifelong connection to Graham, while—for unknown reasons—Soros was not able to effect a similar link to Popper. More generally, Buffett made, collected, and retained, valued personal friends—Soros much less so. (Of course, having a cohort of longtime friends is easier when one remains in one’s hometown, as opposed to jetting around the globe.)

It should be added that Soros admired and benefited from the wide intellectual swathe in post-war England. Until later in life, Buffett was much more focused in his interests.

Work Career

Not without ups and downs, but the talent—or, following Paul Samuelson, the genius of both men stood out. They worked in various companies, in various places, but eventually came to realize that they needed their own funds—which became virtually synonymous with their names.

Of course, their investment philosophies could not have been more different. Buffett studied the records of companies endlessly, determined which were truly undervalued, acquired large stakes in the best and stayed with them, often for decades. Soros focused much more on the moment-to-moment values of entities, pounced instantly on momentary opportunities, and was prepared just as quickly to withdraw, win or lose.

One interesting similarity: both required that investors trust their judgments and be content with periodic reports of how their funds were doing.

To be sure, both could give an elaborate explanation of why they did what they did when they did it—but as in the case of the best tennis players, chess players, or indeed actors or politicians—there seems to have been an intuitive aspect that defies complete explanation. The same has been said of other master investors of the century—Peter Lynch, John Maynard Keynes, and John Templeton. They do the analyses that they feel are necessary, and then act decisively. Indeed, were the opposite the case, were there a foolproof formula for making and keeping money, many of us could have become billionaires!

Close Colleagues

Of course, each master investor had to work with many other individuals. But genuine peers were few and far between. Soros had most luck with Stanley Druckenmiller who directed Soros’ Quantum Fund for a dozen years; he also worked less harmoniously with Jim Rogers for several years. Buffett has had a longer lasting and closer relation to Charles Munger, his (even older) partner for decades. But even these relations seem to have been more transactional than deeply personal. Master investors may necessarily hold their cards close to their chests.

As Managers

According to their biographers, neither man was a good manager of talent. Particularly after he became a worldwide philanthropist, Soros had many organizations to manage. He often did so by pitting individuals against one another and by making quick hiring and firing decisions (very much in keeping with his investment philosophy). Though for a time he was the chief of Salomon Brothers investment firm, Buffett usually worked with much smaller organizations. He did not like conflict, interacted as little as possible with employees, and reportedly never fired anyone! In their relationships to others, one can discern traces of their contrasting investment philosophies.

Ethical Challenges

Each has been in court, defending questionable practices. But in general, they have avoided fierce financial battles and are thought of as quite ethical. Each attributes his ethical compass—his superego in business matters—to his principled father.

Friends and Intimates

Buffett has a charming, if idiosyncratic personality—he collected and kept friends over decades. He typically played bridge and golf with them. Reportedly, he was always the central person in these circles. Like Buffett, as he became a world figure, Soros had many acquaintances of prominence, but as noted above, friendship per se seems to have been less important for him.

Relations to Family

Complex! Both have lived very much in their own private mental worlds; this feature proved challenging for their children (Buffett had three; Soros had five). Ultimately, some became involved in the “family business” of finance, while others followed distinctive and idiosyncratic paths.

Personality

Buffett is an exemplary creature of habit—having the same routine, food, conversations for many decades. Neither friends nor family feel that they know him well. Soros has lived in many worlds—some quite glamorous—but is also quite private. Both men are known as virtually unflappable in human relations. 

Moreover, both men have been known as workaholics for generations. Soros can shift his attention from global to personal matters in seconds; less frequently called to do this, Buffett can also multi-task.

To wax formulaic: Soros thrives on chaos; Buffett dreads it.

Mid-life Crises

George Soros separated from his wife in his mid 40s and for a while was quite lonely and at loose ends. While he had been a severe critique of Freudian theory, Soros benefited from psychoanalysis which helped him understand his anxieties and inadequacies and how to deal with them. Warren Buffett’s wife, Susan, left him unexpectedly also when he was in his mid-forties; and, as was the case with Soros, Buffett went through a period of anguish. But a few years later, at his estranged wife’s encouragement, a woman named Astrid Menks entered his life and soon shared his home. They have remained partners thereafter and were finally married after the death in 2004 of Susan Buffett.

Style of Living

While one of the richest persons on the planet, Buffett has lived a determinedly simple life in nearly every respect. And he has expected that of his children as well. His only extravagance was a private plane, and he was very apologetic about this acquisition. In contrast, while he did not care much about earthly possessions, Soros has been comfortable with a more affluent lifestyle—apparently ushered in especially by his second wife, Susan Webber. Unlike Buffett, he could easily be described as a “jet setter” or as a “Davos man.”

Place in the World Pantheon

Beyond question, Soros has been seen as one of the principal players on the world scene—as one friend quipped “the only world stateman without a state.” Buffett also has a wide ambit of friends, including presidents and well-known personalities, but they are largely restricted to the United States. Despite frequent homilies and occasional public statements, he does not play a significant role in the political realm.

Philanthropy

Soros is one of the major philanthropists in the world. He has had greater ambition and had more impact on politics—especially in Eastern Europe—than any other philanthropist of the era. By this own testimony, Buffett does not have a philanthropic mentality. He is better at making and keeping money than at spending it. But in 2006 he made the unprecedented decision to turn over the bulk of his holdings and estate—worth many billions—to the Bill and Melinda Gates Foundation. He did this because he does not believe in endowing his own family members with many millions (let alone billions!) or in forming his own foundation. Instead, he trusts the judgement and the priorities of the Gates.

Takeaways

If you look at two of the most successful American investors of the last century, you will find suggestive parallels in their lives: date of birth, early interest in and talent for making money, allegiance to a mentor, guarded personalities, midlife marital crises, toughness in challenging situations, and lack of managerial skills.

But in this particular realm—that of investment—I find the differences far more salient. Soros has led a turbulent life and has an investment philosophy that reflects that turbulence. He also has an additional–if more frustrating—life as a synthesizer of ideas, a weekend philosopher if you will. Buffett’s life, much smoother from the outside, has also been internally less turbulent—and he likes it that way. He does not have an unrealized “second life;” he has solved the challenge of what to do with his accumulated money. Both have had impact on those who do not know them personally—Soros, by the force of his ideas, Buffett by the force of his homespun personality, as reflected in his eagerly awaited annual meetings and his pithy messages. 

Finally, while each can give you a detailed explanation of his investment philosophy, informed observers believe that there is an intuition, a “sense of things,” a “feeling of timing” that defies explanation by either the investors or those who follow them more closely. Whether either of those sensibilities will continue to have “cash value” in an increasingly computer-finance world remains to be seen.

REFERENCES

Kaufman, M., 2000. Soros: The Life and Time of a Messianic Billionaire. New York: Vintage.

Lowenstein, R., 2013. Buffett: The Making of an American Capitalist. New York: Random House.

Photo by Chronis Yanon Unsplash