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George Soros Investment Strategies Explained
So many ppl talk about Soros ("he broke the Bank of England!", "Reflexivity FTW!") but it's so hard to find clear, easy-to-follow explanations of:
- i.) what reflexivity actually means
- ii.) the significance in 2021
So many ppl talk about Soros ("he broke the Bank of England!", "Reflexivity FTW!") but it's so hard to find clear, easy-to-follow explanations of:
- i.) what reflexivity actually means
- ii.) the significance in 2021
1) What is reflexivity?
- Reflexivity is the mutually reinforcing relationship btw expectation & reality. Ex: COVID hits and suddenly ppl think "not enough TP to wipe my butt tm!"; they hoard like bloody magpies; TP supply falls off a cliff
- Reflexivity is the mutually reinforcing relationship btw expectation & reality. Ex: COVID hits and suddenly ppl think "not enough TP to wipe my butt tm!"; they hoard like bloody magpies; TP supply falls off a cliff
2nd example: ppl think SNOW's the hottest data chick in town; stonk accelerates faster than its peers; inflated multiples inject SNOW with more capital for S&M; would-be clients start banging on sales reps' doors; revenue goes up; positive earnings surprise; stonk goes up; repeat
3rd example: Asimovians dream of electric sheep--er, cars-- TSLA goes up; enters S&P 500, gets added into index funds and robo advisors; robot buyers hike the stonk; millions of US-fawning Chinese parvenus adopt it as their new status symbol; stonk go up
2) Corporeal knowledge aka “Listen to your gut”
When so-called "rationalists" shirk their emotions as silly, they're usually being... silly. Emotions are not data-free. In fact they contain A TON of data. Ppl need to understand the diff btw endogenous & exogenous variables.
When so-called "rationalists" shirk their emotions as silly, they're usually being... silly. Emotions are not data-free. In fact they contain A TON of data. Ppl need to understand the diff btw endogenous & exogenous variables.
Exogenous vars are explicitly modeled; they're "known knowns" and "known unknowns."
But no modeler/trader really knows the weight of "unknown unknowns." Just b/c you didn't include a var into your model, doesn't mean it doesn't exist.
Emotions are a soup of endogenous vars.
But no modeler/trader really knows the weight of "unknown unknowns." Just b/c you didn't include a var into your model, doesn't mean it doesn't exist.
Emotions are a soup of endogenous vars.
