George Soros and Reflexivity – Great Read

Financial Times: Reality Check

Soros’s key principles are first that “market prices always distort the underlying reality which they are supposed to reflect”; and second, that “instead of playing a purely passive role in reflecting an underlying reality … markets also have an active role: they can affect the so-called fundamen-tals they are supposed to reflect”.

Reflexive markets can turn into bubbles. And bubbles can turn into opportunities to make money for those like Soros, who have the self-discipline to invest in an incipient bubble and get out before it bursts.

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