The Alchemy Of Finance (George Soros)

In “The Alchemy of Finance” by George Soros, the billionaire investor’s unique investment strategy is discussed, which differs from that of other legendary investors. Soros does not follow a specific set of rules and instead relies on his concept of reflexivity, which is the idea that the thinking participants in social science influence the events they participate in, causing feedback loops that can be self-reinforcing. Soros also argues that using faulty models in economics and finance is more dangerous than using no model at all, and that the stock market moves in a boom-bust fashion rather than towards an equilibrium. Finally, Soros views investing as alchemy rather than science and sees the stock market as a laboratory for testing hypotheses. The lesson suggests that investors should focus on identifying when the underlying rules are changing and avoid relying too heavily on traditional models.