George Soros Phenomenon

Soros has bowed out. An adventurer par excellence revelling in acts of extraordinary gallantry, he has acquired celebrity status and an aura of invincibility in this age of global financial markets. Held in reverence and awe for his mastery in taking risks and bets in a volatile environment, Soros has something of the temperament that makes men become racing drivers and trust their lives to what is sometimes pure chance. In the early nineties he created terror and suspense in the world’s financial and exchange markets by pulling sterling out of the European exchange rate mechanism; lira was made to toss in choppy waters; his onslaught on the Thai currency was too massive and relentless; Mahatir was quick to don defensive armour and Hongkong mastered its resources in time to foil the speculative designs on its currency. The Mahatirs of the world would now heave a sigh of relief; a barbarian has made his voluntary exit. There was nonetheless something splendid about Soros. ‘A ballerina who had lost it’: that is how George Soros describes his own exit. The market would certainly be a duller place without him.

What is it that drives such persons, Soros and his like? Robertson, another towering personality in the hedge fund world, named his funds very appropriately, after members of the cat family, Jaguar, Puma, Ocelot. Hiding in the wings the eyes and brains of the fund managers are wired to make the surprise pounce for their kill. Let pundits pontificate on the moods and whims of the market, let academicians debate in their ivory tower on the nature of exuberance: is it rational or irrational? Let tomes be written on what constitutes fundamentals in stock valuations. Rely on your instinct and be decisive in your moves. Keep aside Bagehot’s golden rule of ‘wise apprehensiveness’, leave it as a guideline for small-time pedestrian market players. Jump for the big directional macro bets in the currency and bond markets.