The New Paradigm for Financial Markets.
This is a really interesting book and contrary to what I expected, it’s not about
financial markets, but about life. Though Sorros does use his understanding of
financial markets to try and explain his point.
However, I’m not really sure if I understand his theory of relflexivity.
But I’ll have a try.
For example Neo-capitalists say markets should be unregulated because they will
always find their own equilibrium. But financial reality is in a constant state
of flux and this means that what is essentially the point of equilibrium today
will undergo changes and so next year the very word ‘market equilibrium’ will
mean something rather different to what it does today. So, you’ve got to be
reflexive and watch the changes in reality so that you can gauge how the essence
of the word ‘market equilibrium’ is changing. If you can do that, you should be
able to make a profit in financial markets.
However, what almost anyone terms ‘reality’ is continually subject to change.
(Except perhaps for the fact that we humans are basically just a species of animal.)
But in the world, things change and as they do they alter the point of equilibrium
and therefore alter, to a greater or lesser degree, the direction in which we are
headed. Much as we would like, there is no magic formula which will enable us to sit
back and ‘know’ where the future is headed.
In consequence, if we don’t want to get left behind, every day we’ve all got to be
bright eyed, bushy tailed and very, very alert.
This is an enjoyable book and what I liked most was the kind of diary for March
2008, a time when the financial world was falling apart. Only March is included
in the book because the manuscript had to be sent to the publisher. But I really
think Sorros should publish a similar diary for 2008 and also 2009 so that we can
see the decisions he made during this chaotic period and how they turned out. It
was exciting stuff.
Even if like me, you hate capitalists, this is a good book and will do a lot to
help you understand the nature of capitalism. I recommend it.
Although a Capitalist, Sorros does feel that the markets should be regulated and
the reason for this, as I understand it, is that there are places you most
definitely don't want the point of market equilibrium to be.
(No sensible society wants its financial market to become a monster.)
---November 26, 2013---