Learning from the Alchemist of financial markets "George Soros"
“Consider the statement, ‘it is raining.’ That statement is true or false depending on whether it is, in fact, raining. Now consider the statement, ‘This is a revolutionary moment.’ That statement is reflexive, and its truth value depends on the impact it makes.” (George Soros)
What separates George Soros from the rookie traders who are gunning the market right now?
Soros knows how to manage a trade. He knows how to take profits and he isn't just going to sit and hope when the market turns.
That doesn't mean this is an easy game. The risk is high and so is the reward and if you are undisciplined or lazy you will pay a high price.
I wonder what would be the grade of this analysis if George Soros would score these 5 analyses???
A friendly recommendation:
Read George Soros Book The Alchemy of Finance if you have time..!
It will help you to know the difference between stages of a bubble!
Soros bubble theory:
1. At first, the market slides slowly upwards over time in a rational manner before the positive feedback loop accelerates the market
2. The market goes through a test where it drops significantly. If the positive feedback loop is sufficiently strong, the market will overcome the test and continue its climb. At this point, the market will start to disconnect from underlying fundamentals in a big way.
3. The market will continue its climb farther and farther away from the fundamentals. For an equity index, this may be represented by an increase in pricing multiples not warranted by probable future earnings growth.
4. At some point in time, the market will reach a twilight zone where more and more investors become skeptical and bearish. The disconnect between asset prices and fundamentals recognized by some investors will slow down the market appreciation rate.
5. At some point, for some reason, triggered by anything, the positive feedback loop will reverse and become a negative feedback loop. The negative feedback loop will quite swiftly develop into a frantic panic.
Best,
Moshkelgosha
What separates George Soros from the rookie traders who are gunning the market right now?
Soros knows how to manage a trade. He knows how to take profits and he isn't just going to sit and hope when the market turns.
That doesn't mean this is an easy game. The risk is high and so is the reward and if you are undisciplined or lazy you will pay a high price.
I wonder what would be the grade of this analysis if George Soros would score these 5 analyses???
A friendly recommendation:
Read George Soros Book The Alchemy of Finance if you have time..!
It will help you to know the difference between stages of a bubble!
Soros bubble theory:
1. At first, the market slides slowly upwards over time in a rational manner before the positive feedback loop accelerates the market
2. The market goes through a test where it drops significantly. If the positive feedback loop is sufficiently strong, the market will overcome the test and continue its climb. At this point, the market will start to disconnect from underlying fundamentals in a big way.
3. The market will continue its climb farther and farther away from the fundamentals. For an equity index, this may be represented by an increase in pricing multiples not warranted by probable future earnings growth.
4. At some point in time, the market will reach a twilight zone where more and more investors become skeptical and bearish. The disconnect between asset prices and fundamentals recognized by some investors will slow down the market appreciation rate.
5. At some point, for some reason, triggered by anything, the positive feedback loop will reverse and become a negative feedback loop. The negative feedback loop will quite swiftly develop into a frantic panic.
Best,
Moshkelgosha