Reality. After reading George Soros’ book, The New Paradigm for Financial Markets, I can imagine him tracking us down, asking, “Can you hear me now?” Much of this new book revisits and explains again his earlier work, The Alchemy of Finance, and his theory of reflexivity. Under his theory, there is constant interaction between the objective dimension of cognitive analysis, and the subjective component of trying to beat other investors by taking particular actions. In both books he makes the case for imperfect markets, arguing against the prevailing theory of market equilibrium. Soros suggests that we would be well served if we worked toward a better understanding of the human condition. We are sorely mistaken if we think financial markets can be captured and understood solely by mathematics. He notes that the recent cycles of bubbles and bust prove his theory. The 162 pages of this book are well worth reading, and it’s always interesting to listen to what a billionaire has to say.
Rating: Three-star (Recommended)