Category: Money tips Release Date: 2006-03-04
Soros Investment Tip of the five: We have found links
Financial markets are the social sciences, which is not only natural sciences, while also incorporating the subjective understanding of the participants, and this subjective knowledge of, and interaction between the objective fact, interaction, that is, the concept of imperfect and the actual state of affairs link exists between the development of counter-productive. This reaction had increased the price movement of the complex nature of the close attention not only for Soros, but also explaining the market behavior of financial markets, the classical theory.
Soros in the financial markets by using the theory of alchemy, it is not to fully understand or reveal the true colors of things, but expect to be able to obtain the desired standard state. In his view, the operation of the laws of nature has nothing to do with people's understanding of human nature affect the only way to understand and use these laws, while the financial markets do not follow the thinking of the kind of person independent of any law of nature.
Holding the logic of rational economic life of the opinion that the market is always correct, because the market has taken into account the future development trend, prices tend to discount. Soros believes that any projection of future ideas are biased and incomplete, and participants operate on the basis of skew, but skew their impact on the progress of events, so he may give such an impression: the market possible to accurately predict the future. But the fact is expected to reflect future events are not purely, but has been the future of the expected impact of current events.
Market expectations of actual developments in the reaction of contact, or manifested as self-propelled, or the performance of a warning for the role of anticipation to avoid the deterioration of the situation. For example, the impact of weather on agricultural products market is expected to exaggerate the nature, and because the market's inflation expectations and the increased price of bias, but often this fear would turn the tide of government departments issued a policy to curb further deterioration of the situation.
For us in particular the use of system operation with the City of market participants, the discovery of this reaction, know what the intensity of impact on the market reaction to its goal of maximizing profits of great help.
