The highlights of Soros's biography are well known. Born to middle-class Jewish parents in Budapest in 1930 as György Schwartz, Soros – his father changed the family name in 1936 to avoid antisemitic discrimination – had a tranquil childhood until the second world war, when after the Nazi invasion of Hungary he and his family were forced to assume Christian identities and live under false names. Miraculously, Soros and his family survived the war, escaping the fate suffered by more than two-thirds of Hungary's Jews. Feeling stifled in newly communist Hungary, in 1947 Soros immigrated to the UK, where he studied at the London School of Economics and got to know the Austrian-born philosopher Karl Popper, who became his greatest interlocutor and central intellectual influence.
Soros has long pointed to academic philosophy as his source of inspiration. Soros’s thought and philanthropic career are organised around the idea of the “open society,” a term developed and popularised by Popper in his classic work The Open Society and Its Enemies.
After becoming famous in the financial market, Soros finally published his first book "The Alchemy of Finance" (The Alchemy of Finance) in 1987. Soros developed Popper's falsibility and other scientific philosophy theories into reflexivity theories. It was this theory that allowed Soros to win in investment. This book is different from general financial books. Its reflexive theory is confusing for people in the financial world, and Soros is not good at expressing it, making the book very difficult to read.
Mistakes are human nature, market defects are opportunities
To understand the theory of reflexivity, we must start from Soros's view of epistemology: people's knowledge of the world is necessarily distorted and incomplete. This view leads to two results. The first is that people's understanding of facts can be wrong, which is fallibility. Furthermore, this view questions the classical assumption of economics-the efficient-market hypothesis, that is, people rationally pursue the maximization of their own interests, so the market logic constituted by human behavior is always correct. Due to the nature of people making mistakes, Soros believes that people cannot have an overall grasp of reality, and they are not always rational, and often make wrong decisions. Therefore, the market has no consistent laws at all, which can be said to be chaos.
Soros renamed his fund to Quantum Fund in 1979 to commemorate Werner Heisenberg's uncertainty principle: it is impossible for people to predict the behavior of subatomic particles. Like quantum mechanics, Soros believes that human knowledge and judgment and even the market are always in a state of uncertainty and constant change. He calls this the "human uncertainty principle" (the human uncertainty principle).
Mistakes are not limited to human behavior, but also in the policies of governments of various countries. It is precisely because of the lack of control of the financial market by governments of various countries that Soros can obtain such a huge amount of profit. He once said: "I can obtain such a high profit in the market, which in itself proves that the market is ineffective."
In the chaotic financial market, people make mistakes. Soros compares the reflexive relationship between the market and market participants and policy makers, especially when the decision makers make serious mistakes without realizing it, he sees opportunities. Speculation with big bets.
Soros uses this way of thinking to judge the situation, development and weakness of the world's various markets, and has maintained a very high hit rate for decades. Soros believes that not only economic decision-making, politics, and even humanities, all operate with reflexivity. Soros once admitted that this is a cliché, but according to his observations, most people in the world ignore this very simple truth, and therefore only have a one-sided understanding and judgment of the world.
Soros's investment "philosophy":
1. Chaos is always an opportunity
The "chaos" in the eyes of others is an opportunity in Soros's eyes. He said: "Financial markets are inherently unstable. The flow of capital is both prosperous and dry. There are friends and friends. Wherever the market is chaotic, you can make money. As long as you can recognize chaos, you may get rich and become more chaotic. Can develop."
2. Amit your failure and leave quickly
Eyes and hands are quick, flashes when you see mistakes! Soros said: "Most investors are reluctant to sell, and they are reluctant to sell when they rise, and they often leave the market at the lowest point in the end." One of Soros's abilities is that he can quickly detect mistakes. In his eyes, humans’ perception of things is incomplete and flawed, so they are inherently prone to errors. Soros will reflect every time he makes a mistake, making him extraordinary.
3. Learn from history
Soros successfully predicted the stock market crash in 1987, and the secret is to learn from history. Historical experience can often predict the future, because history repeats itself.
4. Don't bet your entire wealth
Soros has a principle, that is, he will not bet on his entire wealth, "will not put all the eggs in the same basket," so he will never be tied to the market.
5. Read more
Soros reads dozens of various professional publications every day, and understands all of them personally, not just listening to suggestions.
6. Learn from the action
The market is ever-changing, and it is impossible to fully understand and act. Soros prefers to enter the market first and review the deficiencies in the process.
7. Find gold in the garbage
Soros was particularly interested in unpopular things. In 1960, he discovered that a German insurance company, Union, had a stock price that was too low compared to its asset value. So he began to recommend Union, and he earned a triple.
8. Never believe the big market
Soros said: "The market trend does not necessarily reflect the essence of the market, but reflects the expectations of investors, but investors are often irrational. If there are only two or three kittens watching the market in the trading hall, you should enter the market; There are so many people at the counter, it's time to leave."
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