The New Paradigm for Financial Markets

Book Title: The New Paradigm for Financial Markets

Author(s): George Soros

Rating: $

About the Author:

George Soros is chairman of Soros Fund Management and is the founder of a global network of foundations dedicated to supporting open societies. He is the author of several best-selling books, including The Bubble of American Supremacy, Underwriting Democracy, and The Age of Fallibility. He was born in Budapest and lives in New York City.

Review:

For those who expect to gain insights into financial markets and what lies ahead of the current turmoil, be prepared for disappointment. “Self-indulgence of a successful speculator” was what critics had to say about his philosophical moorings in his earlier book The Alchemy of Finance and now holds equally true for this book as well.

To explain what the book is all about and why it’s not great read, consider what Soros has to say about the book in the opening lines of conclusion section of the book:

“My main purpose in writing this book is to demonstrate the validity and importance of reflexivity. The moment is auspicious. Not only has the prevailing paradigm—equilibrium theory, and its political derivative, market fundamentalism — proven itself incapable of explaining the current state of affairs, it can be held responsible for landing us in the mess we are in. We badly need a new paradigm. But the new paradigm I am proposing—the recognition of reflexivity—still has to prove its worth”

Soros’ treatment of the background to the current financial crisis is at the best shallow and his insights into what lies ahead are too general (and rightly so) to serve any purpose.

Apart from the fact the book is one of the most contemporary (went into print sometime after April 2008) and comes from the most successful investor of our times, the book has virtually nothing to offer. Infact, Soros himself admits the case, consider this:

“Unfortunately, the idea that I was a failed philosopher came to be accepted by those who wrote about me, including my biographer, Michael Kaufman. He quoted my son Robert:

My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is bullshit. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s this early warning sign.
If you’re around him a long time, you realize that to a large extent he is driven by temperament. But he is always trying to rationalize what are basically his emotions. And he is living in a constant state of not exactly denial, but rationalization of his emotional state. And it’s very funny.*”

My recommendation – avoid this one