RUTH SUNDERLAND: Soros and Buffett about to turn 90

Business


Two gurus of the financial world, Warren Buffett and George Soros, celebrate their 90th birthdays this month. They are towering figures with the aura of visionaries. In the pandemic, their wisdom is sought more avidly than ever. 

On the face of it, they are poles apart. 

Buffett is the all-American investor, with deep and immovable Nebraskan roots. 

Birthday boys: Warren Buffett (left) is the all-American investor, while George Soros is the quintessential European

Soros is the quintessential European, profoundly engaged with the continent, its complex history and its fractured present. 

In the popular imagination, he is the arch-speculator. He is embedded in British folklore as the hedge fund manager who ‘broke the Bank of England’ in 1992 – albeit that by forcing our exit from the ERM, a precursor of the single currency, he did us a huge favour. 

Buffett, known as the Sage of Omaha, is the ultimate long-termist, who learned at the feet of the legendary American investor Benjamin Graham. 

He wraps up his messages in deceptively simple homespun homilies like this one, my favourite: ‘Cash is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.’ 

Claiming to regard himself as a failed philosopher, Soros is more Café de Flore than cherry coke. 

He developed a conceptual framework around ‘fallibility’ and ‘reflexivity’ about the complex relationship between thinking and reality, and claims it gave him the edge as an investor. 

For all their differences, the fact both were born at the start of the Thirties is significant. That turbulent decade, and the one that followed, shaped their outlook and placed them outside the mainstream. 

Soros found it hard to embrace conventional economic theory, which is based on the notion of equilibrium, because of his experience as a 14-year-old when the Nazis invaded his native Hungary. 

The threat of being deported and killed just for being Jewish was, he drily notes, ‘far from equilibrium’.

Growing up in the agricultural state of Nebraska, Buffett was irrevocably marked by the Great Depression, when the bank where his father worked went under and plunged the family into hardship. 

Living there most of the rest of his life has literally set him apart from the Wall Street herd. 

Soros is the more overtly political of the two. He believes passionately that only open, democratic societies can thrive. Both have clashed with Donald Trump, whom Soros calls a ‘confidence trickster’ in a 90th birthday interview. 

Buffett, who provoked the President’s rage by selling shares in airlines, describes himself as a Democrat but not a card-carrying one. 

Unlike the two great nonagenarians, most of us living in Europe and America now are too young to have experienced anything other than security, peace and prosperity. For decades, in the developed countries of the western world at least, we could delude ourselves we had beaten history. 

Liberal democracy, capitalism and medical science have given us lives that would have been beyond people’s wildest dreams 90 years ago. 

As with cash or oxygen in Buffett’s aphorism, we had the luxury of not needing to think about our great good fortune, but we do now. 

What are their views? 

Soros believes Europe is vulnerable to enemies inside and out. Germany and the frugal countries of the north, he says, need to ditch their opposition to large-scale borrowing so the EU has enough money to deal with the virus and climate change. 

Buffett says his faith in ‘the American miracle, the American magic’ and by extension capitalism and democracy, is unshaken. 

Covid-19 reminds us that health, wealth and freedom are not a natural state of being but can be snatched away in an instant. 

Soros and Buffett knew it all along. They have grown wise and rich on the knowledge, through their long lives.

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