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Quantum, the two had their first open quarrel. Druckenmiller had taken a position in bonds.10 Without consulting him, Soros sold the bonds. It was the first time Soros had gone behind Druckenmiller's back. Druckenmiller exploded. Eventually Soros calmed down and promised he would keep his distance.

Events took a dramatic turn in Eastern Europe. Communist regimes began to fall. The Berlin Wall tumbled. Soros was following these events on a daily basis. In the summer of 1989, Soros told Druckenmiller he must take full charge of running the fund. "I became the coach and he became the competitor."11

Soros succeeded temporarily on the successor front when he hired Druckenmiller in 1989 to run the Quantum Fund so he could concentrate on philanthropy. It bought Soros some time; Druckenmiller lasted for 11 years. But there had been a list of several predecessors, including Jim Marquez and Allan Raphael.

Prior to the 2000 defections, Soros had its share of spin-offs as well. Examples included Lief Rosenblatt, Mark Sonnino, and Gabe Nechamkin, who had worked at Soros Fund Management for 11 years heading up the special situations investment team; they announced their departure in mid-1999 and the formation of Satellite Asset Management.

And even though Soros had Druckenmiller on board since 1989, when push came to shove Soros brought in his son Robert during the reorganization transition to a more conservative fund. Robert is acting as the coordinator in the transition.

VOLATILITY IN THE MARKETS AND THE SHIFT TO NEW TECHNOLOGIES

For some of the hedge fund superstars, the game was no longer fun. Market conditions were frustrating. Technology stocks were difficult to fathom. The markets were too volatile, especially the technology stocks. Six times in March 2000 the Nasdaq moved more than 6 percent in one day.

The volatility, a new phenomenon, had been largely caused by a high degree of public speculation—uninformed performance chasing and momentum chasing. Stock market moves often have no connection to rationality or anything fundamental. This has caused some managers to look more skeptically at the message given by the markets. It has also made it harder to sell short.

Technology proved to be the Achilles' heel for the Old Genera-