The Economist.
Hello, Alice Fullwood here, co-host of Money Talks, our weekly podcast on markets, the economy and business.
Welcome to Editor's Picks.
You're about to hear an article from the latest edition of The Economist.
Thanks for listening.
One day in 1992, Stanley Druckenmiller marched into his boss's office saying, George,
I'm going to sell $5.5 billion worth of British pounds tonight and buy Deutsche Marks.
George was George Soros, and Mr. Druckenmiller, his protégé, was running his quantum hedge fund.
The idea was that the Bank of England was trying to sustain an unsustainable exchange rate peg
which speculative pressure could break, forcing the depreciation of the pound and netting quantum a huge profit.
But the $5.5 billion would put 100% of the fund's assets behind one wildly risky bet.
That is the most ridiculous use of money management I ever heard, Mr. Soros said.
We should have two hundred percent of our net worth in this trade.
It worked, and Mr. Soros became the man who broke the Bank of England.
Plenty, including Mr. Druckenmiller, reckoned he thereby demonstrated two cardinal virtues of great investors,
the wisdom to spot a winning chance and the nerve to bet the house on it.
Perhaps.
But for Buttonwood's money, Mr. Soros also demonstrated two other crucial and underrated virtues.
What a great investor really needs is a big dose of luck and a distinctly odd character.
Mr. Soros was certainly lucky.