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George Soros and the Theory of Price Reflexivity

In Articles on August 9, 2011 at 4:48 pm

Perception is reality. At least according to George Soros’ interpretation on price reflexivity that implies a self-reinforcing boom and bust pattern, i.e., prices do influence the fundamental and change expectations thereafter through price dynamics. We certainly wouldn’t like to relive the incoming train wreck of the subprime mortgages culminating with full speed. The recent precipitous 12-day drop of the Dow Jones certainly brings back the fear instinct in all of us. All the market needs now is a boost of confidence to reverse the trend.

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