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The Alchemy of Finance: Reading the Mind of the Market 2nd Edition
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Top Customer Reviews
Political / financial thrillers are made of this kind of material so one would suppose that the people who bought the book did so to relive the action or maybe (hopefully) to learn the art for themselves. They'll all be disappointed since Soros comes across as a politico/economic theorist with The Alchemy of Finance reading more like a set of (interesting) academic articles.
He highlights an aspect of economic or rather historical events that doesn't appear in economics textbooks giving it the awkward name of "reflexivity". His view is that the standard classical text (from Adam Smith) only paints part of the picture of economic change, namely that part of change that takes place in an orderly stable environment.
In the standard terminology things tend to move towards an equilibrium as consumers and producers adjust to present market conditions with a closer approximation to equilibrium being the efficient "good thing". Soros's insight (rediscovery) is that a real approach to the ideal of equilibrium implies a stagnation and freezing of change in society. His healthy norm therefore becomes a world of permanent disequilibrium as prices and production never stabilise, being constantly overtaken by changing tastes and technology.
"Reflexivity" is more a case of instability taking on a life of its own that may or may not be positive. The essential element is that a feedback process is set in motion that is the exact opposite of an equilibrium seeking system.Read more ›
The difference between a participant and a natural scientist is that the scientist attempts to not interfere while participants try to mold situations to their own satisfaction. The deductive nomological model does not apply to situations with thinking participants.
There is a shoelace connection between perceptions and facts. The cognitive function continuously affects the participating function and vice versa.
Stock market valuations influence values through repurchase of shares and options, mergers, acquisitions, going public, private etc...
Two points made in the beginning chapters are that:
1) Markets are biased in one direction or another.
2) Markets influence events that they anticipate.
Most Recent Customer Reviews
Firstly, a little light about the author. George Soros is one of the most influential investor of our times. Read morePublished 20 months ago by Fyers Securities
One trap you can fall into in life is to not learn from those that you disagree with, for one reason or another. George Soros would be an example of that. Read morePublished on February 12, 2011 by David Merkel