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Market prices are always wrong in the sense that they present a biased view of the future.

George Soros

I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them.
GEORGE SOROS

Criticism Myself Qualification Reality Study Theory
There is always a divergence between our perception and what actually exists.
GEORGE SOROS

Existence Ourselves Perception
No individual anonymous participant can influence the prices and therefore you really can speculate in the market without paying attention to morality. That’s one of the positive features of markets. That’s why they function.
GEORGE SOROS

Attention Feature Influence Market Moral Oneself Participant Pay Positive Price
Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
GEORGE SOROS

Concept Growth Market Reality Stock
It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.
GEORGE SOROS

Important Lose Money Right Wrong Yourself
Well, you know, I was a human being before I became a businessman.
GEORGE SOROS

Business Career Human Man Myself Transformation
The reality is that financial markets are self-destabilizing; occasionally they tend toward disequilibrium, not equilibrium.
GEORGE SOROS

Marketing Reality Science
The hardest thing to judge is what level of risk is safe.
GEORGE SOROS

Hard Judgement Level Life Risk
Hedge funds are a very efficient way of managing money. But there are clearly some risks. Hedge funds use credit and credit is a source of instability. Transactions involving credit should be regulated.
GEORGE SOROS

Instability Management Money Regulation Risk Transaction Way
The trouble with institutional investors is that their performance is usually measured relative to their peer group and not by an absolute yardstick. This makes them trend followers by definition.
GEORGE SOROS

Follow Institution Performance Relation Trend Trouble
In politics, manipulating reality can take presidence over finding reality.
GEORGE SOROS

Finding Manipulation Politics Reality
Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes.
GEORGE SOROS

Condition Failure Human Imperfection Mistake Ourselves Understand Wrong
Political debate is more interested in manipulating the truth, than finding the truth.
GEORGE SOROS

Finding Interest Manipulation Politics Truth
Start by assuming the market is always wrong, so if you copy everybody else on Wall Street, you’re doomed to do poorly.
GEORGE SOROS

Assumption Poor Start Wrong Yourself
Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.
GEORGE SOROS

Element Myself Reality Relate Trend World
Every bubble has two components: something – some real trend, and a misconception about that trend.
GEORGE SOROS

Component Concept Reality Trend

Market prices are always wrong in the sense that they present a biased view of the future.

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Market prices are always wrong in the sense that they present a biased view of the future.

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