Thoughts on reflexivity?
You guys had a pretty good discussion on the random walk theory the other day so, I figured that maybe we could shine a light on our good friend Georgie this time and discuss his own theory of reflexivity. The verbose man’s verbose man, Soros has written miles of text and has spoken extensively on his precious theory (I swear, that dude plugs it every time he’s on camera) yet, much to his chagrin, it receives precious little recognition as a legitimate argument.
What do you guys think? Is it complete BS? Or is it legit enough for you to use it on your next interview stock pitch?
A lot of heavy, heavy hitters actually put some weight on it; Stanley Druckenmiller does, PTJ as well, and Soros himself definitely isn’t someone you’d put on your “fade” list. It's also pretty easy to catch in action (for the uninitiated, read Alchemy of Finance, or ft.com/intl/cms/s/2/0ca06172-bfe9-11de-aed2-00144feab49a.html#axzz1j0PtcxOh">this FT article, or if you have 50 minutes to kill,
.); it happens all the time with financials and RE, where market sentiment/price has the ability to change fundamentals, and for a more recent example take Italian bond yields, which pretty much held steady (even dropping in 2010) until the markets “created a bias” that royally fucked an already limping Italian economy - fulfilling their own prognoses.While it may have a lot of salient points which I believe in, as a financial theory I’m a little disinclined to welcome it like how the Fama boys do EMH. Then again, I’m more of a take what is useful, leave what is useless, and make it your own kinda guy. How about you monkeys? Are they simply musings of an old, batshit crazy, wannabe philosopher? Or is it something to put a lot of weight into?
Have a good one WSO.
It exists and is worth paying attention to, and that's about it. It's just simple human psychology; why George Soros gets to own this concept is beyond me...
Yah but if you read his books and papers, he is putting data and formulas to that psychology. Very few people can do that. Alchemy of Finance ain't easy read, or do you think it is?
Also, the prose of Soros makes him sound like he's trying way to hard. If it takes you ten convoluted sentences to explain a simple concept, it becomes a little difficult for people to take you seriously as an enlightened intellectual.
What do you mean "it receives precious little recognition as a legitimate argument?" It's obviously true, particularly in the case of refis or rights offerings (as you mentioned with Italy). Why he obsessively plugs something so unremarkable is the real mystery.
Hah. Should've been clearer on this. Anyway, it's just like what you said man, its so unremarkable that practically nobody calls it a theory. Can't even imagine hearing somebody say "according to the theory of reflexivity" in an interview.
Yeah...its kind of obvious. It's even true in some consumer-facing industries in which consumers are market participants (e.g high-end gambling).
i remember once Soros's son mentioned how Soros starts having a back pain before a potential loss and he pulls out. This man to me is a real bsd. He studied philosophy under Popper and its amazing how he wanted to retire with few hundred grand so he could support his philosophy career. Soros reflexivity theory does have merit but he never gives away timing in his theory.
i've brought it up in interviews before and been successful. i'm also a believer for sure.
I've read a few Soros articles and his book on the crash of 2008.
Do you guys think his theory is more than just a theory of the leverage cycle? This is a interesting basic lecture on that
(some guy at Yale).
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