The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

by Gregory Zuckerman

With Soros out of the way, Druckenmiller placed a huge bet on deutsche marks, resulting in a gain of nearly 30 percent for the Quantum Fund in 1990. Two years later, with Soros back in New York and relations improved between the two men, Druckenmiller walked into Soros’s expansive midtown office to share his next big move: slowly expanding an existing wager against the British pound. Druckenmiller told Soros authorities in the country were bound to break from the European Exchange Rate Mechanism and allow the pound to fall in value, helping Britain emerge from recession. His stance was unpopular, Druckenmiller acknowledged, but he professed confidence the scenario would unfold. Complete silence from Soros. Then, an expression of bewilderment. Soros gave a look “like I was a moron,” Druckenmiller recalls. “That doesn’t make sense,” Soros told him. Before Druckenmiller had a chance to defend his thesis, Soros cut him off. “Trades like this only happen every twenty years or so,” Soros said. He was imploring Druckenmiller to expand his bet. The Quantum Fund sold short about $10 billion of the British currency. Rivals, learning what was happening or arriving at similar conclusions, were soon doing the same, pushing the pound lower while exerting pressure on British authorities. On September 16, 1992, the government abandoned its efforts to prop up the pound, devaluing the currency by 20 percent, earning Druckenmiller and Soros more than $1 billion in just twenty-four hours. The...