After serving Wall Street firms as an investment-portfolio manager and analyst, Soros turned to managing the Quantum Fund, an investment vehicle that he launched (under another name) in 1969. Its performance has been spectacular: compounded annual returns of 34 percent by the end of 1992 brought the fund's assets to $3.734 billion. An investor who placed $10,000 in Quantum at its inception and reinvested all dividends would by last year have held the sum of $12,982,827.62.

Soros has had financial setbacks, though. His fund posted a 22.9 percent loss in 1981, when he miscalled the direction of interest rates and took a bath in bonds; it shed $800 million in the 1987 market crash, which Soros had as much as predicted in The Alchemy of Finance earlier that year but had expected would hit first and with most force in Tokyo. High risk is a feature of "hedge" funds like Quantum, whose managers may borrow several times the value of their holdings to place large, aggressive market bets using futures, options, and other derivative securities, while hedging, or minimizing, potential losses with other such combinations of financial instruments. But at the end of the day they must be right in their hunches, or the consequences will be devastating. "To me, it's always been a very painful process, very painful, involving great suffering, actually," Soros once told a reporter. "Because if you lose money, it's very painful, and you can't make it without the threat of losing it."

Toughness is a Soros trait. Financial peers at one time described Soros as cold and arrogant, and Quantum has come under scrutiny for allegedly joining forces with the Salomon Brothers investment bank in a 1991 Treasury market "squeeze" maneuver. But he allows that his fiercely single-minded approach to markets has mellowed in recent years, referring to a 1981 "crisis" that he describes as "a battle between me and my success—that is to say, 'Am I the slave of my success or am I the master of my destiny?'" He resolved this in part by shifting his focus to Eastern European philanthropy and activism.

Another trademark is Soros's ability to discern patterns where others see only chaos. "He sees trends globally, and he understands enough about how markets work so that he can see where to apply leverage—both intellectual and financial leverage," says Michael Lipper, the head of a Wall Street firm that tracks investment-fund performance, and a longtime Soros-watcher. "He can think out where a trend is going, and which security would be the major beneficiary of it."

Soros's bet against the British pound was one such play. On instructions from his Soros Fund Management think tank in New York, the Netherlands Antilles-based Quantum Fund (its offshore status frees it from U.S. regulation, and U.S. citizens, excepting Soros and a few officers of the fund, are not allowed to hold its shares) and related entities borrowed heavily in sterling, sold those pounds for German marks and French francs, and then locked in profits by repaying the sterling loans with devalued pounds. Soros made parallel bets in British stocks and German and French bonds to boost profits, which eventually came to $1.3 billion. Soros felt confident betting much on the collapse of the pound: the same process that had lifted the Iron Curtain and reunified Germany obliged the Deutsche Bundesbank to raise interest rates in order to dampen inflation, putting unbearable pressure on the recessionary British economy—and the pound.