Soros quote on tail risk

Discussion in 'Risk Management' started by Daal, Nov 8, 2020.

  1. lindq

    lindq


    I have not read Soros. Which of his books would you suggest?
     
    #11     Nov 9, 2020
  2. piezoe

    piezoe

    Soros writes well, but not quite so well that he is easy to read. It's most definitely worthwhile reading nevertheless. Helpful would be a knowledge of market terminology, economics at an undergraduate level plus some knowledge of banking. Without this background , his writing on investing and trading might be too difficult a read .

    There are two books that I would say are essential. I would recommend starting with "The Alchemy of Finance". This was first published in 1987 and has been through at least two editions since, probably more by now. Mine is the 2003 edition. This is where he lays out his ideas on "reflexivity" in markets and how that differs from prevailing views which he calls "market fundamentalism." I'm looking at my copy as I write this and I note that in Soros's preface I had made some marks. I will quote from his preface to give you the flavor of his writing and an idea of what is in the book.

    "The concept of multiple equilibria begins to recognize reflexivity as a phenomenon, although it fails to deal with it the right way. So the theory of reflexivity should not be as alien to the thinking of academic economists as it was at the time the book was first published. [then I drew brackets around the following paragraph and underlined part of it.]

    Yet the theory of reflexivity has made surprisingly few inroads into public discourse. The prevailing view remains that leaving financial markets to their own devices will assure optimum allocation of resources. Indeed, market fundamentalism has become even more influential than it was 15 years ago. "

    Then Soros goes on to write:

    "Undoubtedly, I must accept responsibility for having failed to communicate my ideas effectively. The central thesis, that the bias prevailing in the financial markets can affect so so-called fundamentals that the markets are supposed to reflect, does not seem to have registered. I feel obliged to make another try at explaining my view of the world. My own thinking has also evolved in the past 15 years, and I ought to be able to explain myself better."
    After reading "The Alchemy...", I would read the "Soros Lectures at the Central European University." This is a little book of 127 pages where Soros distills his thinking on markets down to the core ideas and presents them in a series of lectures. These lectures, I believe, are on You Tube. That's where I became aware of them, but I found it was much better to read them written out. I had to read this book twice because there is a lot to comprehend in a brief package.

    There are other interesting books of course. "Soros on Soros" is one of them. It's in interview form. And there are books detailing his philanthropic work, but the two books above that i mentioned are where the you will find the reasoning that underlay his investing and trading.

    There is an interesting story of how Stanley Druckenmiller and Soros hooked up. As a then relatively young man, Druckenmiller had read Soros's book, went to meet Soros and ask him some questions. Soros was so impressed with Druckenmillers understanding of reflexivity and other Soros concepts that he hired Druckenmiller to run the Quantum fund. That was in the late 1980s, probably, I would guess, shortly after "The Alchemy of Finance" appeared.. As we know, Druckenmiller went on to a very successful career managing his own fund, which he says he managed using what he had learned from Soros at the Quantum Fund.

    It was after reading Soros that I was able to figure out for myself the mistakes Greenspan had made leading up to the 2007-9 financial crisis and why he had made them. The flaws in Greenspan's thinking were very clear to me. Too bad for all of us that Soros's contributions were not available to Greenspan before he became Fed Chair.
     
    #12     Nov 9, 2020
    jys78 and qlai like this.
  3. lindq

    lindq

    Thank you.
     
    #13     Nov 9, 2020
  4. qlai

    qlai

    #14     Nov 9, 2020
  5. Wow, I have never read anything by him so far.
     
    #15     Nov 23, 2020
  6. I believe that if a strategy is already working for you, you better stick to it. What is working for others might not work for you.
     
    #16     Nov 24, 2020
  7. .sigma

    .sigma

    Maybe Talebs self-referential ego-style annoyed you because it reminded you of some traits of yourself.

    Taleb is always a great read, regardless of his faults.
     
    #17     Dec 21, 2020
  8. .sigma

    .sigma

    Safe to say you've never read Taleb in your life lol
     
    #18     Dec 21, 2020
    tomorton likes this.
  9. tomorton

    tomorton


    I find he's a clever man, and one who never lets you forget it.
     
    #19     Dec 21, 2020
  10. .sigma

    .sigma

    Dude if I escaped Lebanon and made a grip off DOTM puts and have published 4+ successful books combining philosophy and optionality I might have an ego as well. Taleb will grow out of it as he gets older. Some drop the ego earlier, its all on the individual's enlightenment in this journey. But I'm a fan of Taleb, and his witty arrogance.. we need someone who calls out these academicians on their bullshit, I'm for it.
     
    #20     Dec 21, 2020