Note: Soros, the billionaire hedge fund operator who finances various leftist and Marxist groups, has made his fortune by betting on the collapse of national economies and currencies. He was convicted of insider trading in France.
Soros interview with Mario Calvo-Platero, La Repubblica, August 11, 2020.
Q) What made you so successful in the financial markets?
A) As I mentioned before, I have developed a conceptual framework that gave me an advantage. It is about the complex relationship between thinking and reality, but I have used the market as a testing ground for the validity of my theory. I can sum it up in two simple propositions. One is that in situations that have thinking participants the participants’ view of the world is always incomplete and distorted. That is fallibility. The other is that these distorted views can influence the situation to which they relate and distorted views lead to inappropriate actions. That is reflexivity. This theory gave me a leg up, but now that my “Alchemy of Finance” is practically compulsory reading for professional market participants I have lost my advantage. Recognizing this, I am now no longer a market participant.
Q) Does your framework tell you to worry about the perceived disconnect between market valuations and the weakness of the economy? Are we in a bubble fueled by the huge liquidity made available by the Fed?
A) You hit the nail on the head. The Fed did much better than President Trump who criticized it. It flooded the markets with liquidity. The market is now sustained by two considerations. One is that it expects an even larger injection of fiscal stimulus than the $1.8 trillion CARES Act in the near future; the other is that Trump will announce a vaccine before the elections.