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The Alchemy of Finance: Reading the Mind of the Market

3.7  ·  Rating Details ·  1,728 Ratings  ·  87 Reviews
Internationally-renowned investment guru, George Soros presents a theoretical and practical account of current financial trends. Details his innovative investment practices along with his views of the world and world order. President of the phenomenally successful Quantum Fund, which has 4.2 billion in net assets, Soros describes his "theory of reflexivity" which underlies ...more
Hardcover, 367 pages
Published May 17th 1994 by Wiley (first published 1987)
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Mara
Let's not skirt around the issue here- this book loses about a bajillion points* for having a man in a suit with his arms folded on its cover.
The Alchemy of Finance George Soros
What does having your arms folded on the cover of your book say?
Typically one of two things:
1. "I'm taking back my America one book at a time!"; or (and this one is more common)
2. ADVICE!! "I am about to give you lots and lots of advice that will solve all of your problems and/or make you rich and/or force you to acknowledge that you'll never be able
...more
Riku Sayuj
Dec 04, 2012 Riku Sayuj rated it really liked it  ·  review of another edition
Finally an expert who admits that he is shooting in the dark, mostly.
Stirling Mortlock
This is a book I read and re-read on a regular basis.
Soros has the greatest track record of any money manager, ever. This should give anyone who is interested in managing money, or managing their own money, a reason to read the book in which he describes exactly how he has made his billions.
It surprises me how many people have read the book, and yet, so few put the actual theoretical framework to use. Despite Soros's introduction of the ideas of reflexivity in financial markets nearly 30 years
...more
Agenor
May 16, 2015 Agenor rated it it was amazing  ·  review of another edition
It is a rare thing indeed that someone who has had extraordinary success in a field takes the time to set out how he views his field and the main drivers behind his success, even rarer in financial markets. And yet here is this rare gem of a book, available to all who can be bothered to read it.

This is not a get-rich-quick book, nor a step-by-step guide to Soros's decision making process. This is a book for those involved in financial markets, particularly those with a philosophical leaning. A
...more
Gabriel Pinkus
This book, much like John Burr Williams' Theory of Investment Value could be shortened immensely for the big idea one ought to take away - The Theory of Reflexivity

Soros' Theory of Reflexivity is a rational explanation of why economics is so terrible (read: absolutely awful) predictor of the future, and why social sciences as a whole tend to fall so short of natural sciences. Economists tend to get "physics envy". When you have thinking participants, results change. In physics, gravity pulls you
...more
Amir Dov
The Alchemy of Finance provides a peek to the mind and thinking process of who is probably the most successful market speculator in history.

The book can be generally divided to two themes (although with no particular order, as the chapters are kind of mixed):

The first theme is Soros' concept of reflexivity - which includes the explanation of what's wrong with the current academic conception of economics / finance as a social science, and some theoretical background to his own perspective which
...more
Matt Kelty
A very smart, successful man is now a billionaire, but in his heart would rather be a philosophy professor. He realizes, along with many other people, that feedback loops exist in financial markets. He calls said feedback loops "reflexivity" and writes 200 pages. It's actually kind of fun to read, but there isn't much meat beyond this one concept. If he was able to make his fortune solely through an edge based on identifying feedback loops, there is a better book to be written eventually.
George Jankovic
May 07, 2016 George Jankovic rated it it was amazing  ·  review of another edition
A book by one of the 2-3 greatest investors of all time. It's about his reflexivity theory: stock prices are influenced by the economy then they, in turn, influence the real economy. And how all that applies to investing.
Asif
Jan 30, 2015 Asif rated it liked it  ·  review of another edition
Interested read. Found myself agreeing to the concept of changing equilibrium and two way causality (reflexiveness) but also disagreeing with some of his views.
U-ming Lee
Dec 01, 2012 U-ming Lee rated it really liked it  ·  review of another edition
I read and listened to this book multiple times. This is, at various times, a personal reflection of the author's life, philosophical ruminations and accounts of some of the investment activities that Soros had been engaged in throughout his life.

The central idea of the book is Soros' theory of reflexivity. Soros spends some time excoriating the "efficient markets" advocates that have proliferated in academic finance. The premise that markets know best and that securities prices reflect all curr
...more
Christo
Jan 21, 2016 Christo rated it it was amazing  ·  review of another edition
Short review: Hard work, but deep. A better title would be "The Alchemy of How Everything Works".

Long review:
Nominally, “The Alchemy of Finance” is about understanding markets and making better investing decisions. If that is all one learned it would be a crying shame, because the book is actually about understanding reality and making better decisions. To restrict it to the markets is a serious mistake and not one Soros makes.

One of the most important steps to understanding reality is understan
...more
Ben Sutter
Feb 11, 2016 Ben Sutter rated it did not like it  ·  review of another edition
I slogged my way through the first 200 pages of this...but enough is enough.

What I learnt is:

1) George Soros took high risk, leveraged positions. He became very rich. He may well have been skillful. He might have just been lucky. The Alchemy of Finance has not assisted me in determining which is more probable.

2) If he was skillful at making money, he certainly isn't skillful at communicating his methods and strategy. This writing style is muddy, convoluted and the majority of the content is sp
...more
Vaishali
Dry, and far more nonlinear than expected. Prepare yourself to repeat sentences; Soros writes like an academic, and even alludes to this once. The one concept he hammers in more than any other : markets do & will fluctuate.

Here are some rare brass tacks :

"I react to events in the marketplace as an animal reacts to events in the jungle... for instance I used to be able to anticipate an impending disaster because it manifested itself in the form of a backache."

"If we want to understand the re
...more
Travis Steward
Jan 16, 2016 Travis Steward rated it it was amazing  ·  review of another edition
This is a deeply philosophical book that has not only dramatically affected the methods I use to invest, but how I look at science and any results based discipline.

I think Soros is a total iconoclastic genius, but feel he does suffer some convolution of ideas. He's exactly right in naming this book the way he did. Frankly, I didn't find the "theory of reflexivity" that compelling. It was so many other areas of the book I found intriguing: 1. that the stock market is a feedback mechanism that te
...more
Lee M.
Oct 20, 2014 Lee M. rated it it was amazing  ·  review of another edition
Book Review: Soros George ‘The Alchemy of Finance’ (2003)

This is quite a ground-breaking book. In this work, George Soros explains in detail his theory of Reflexivity and its application to the financial markets. He also gives important insights into his decision-making.

Reflexivity theory is to be contrasted with traditional Equilibrium theory in Economics. I have given an overview of this theoretical debate recently, and so will not repeat it here.

Soros applies Reflexivity theory to several h
...more
Samiur
Mar 19, 2014 Samiur rated it liked it  ·  review of another edition
The original masterpiece - original (and first) in Soros' discussing his theory on Reflexivity. Over the years, he's repeated his theory over and over and over...and over, and over again as primers, intros etc. -- which is beyond absurdity and pointless. But, yes this'd be the original masterpiece for what it's worth. Herd behavior, Irrational Exuberance (by Shiller) among other topics and authors have presented similar views -- but no one to my knowledge has attempted to milk the same cow as ma ...more
Ryan Nunley
Aug 01, 2015 Ryan Nunley rated it really liked it  ·  review of another edition
George Soros uses his technical knowledge to portray his abilities to use the boom-bust cycle of succeeding in the markets. He argues in opposition of the 'Random Walk Theory' but acknowledges at times where he felt such a walk in the markets. Soros doesn't lay out his trading strategies but reveals the general principles that led him in his strategies and history of how he achieved business success.
Lori (Lara Britt) Sailiata
George Soros is interested in laying out the fundamentals rather than giving trendy advice. That makes this a must-read and re-read book. His advice is not wholly in sync with Jack Bogle's, but neither is it wholly at odds. Index funds are safest for most, but wading into stocks with the right mindset has its rewards.
Thomas Cooper
Mar 07, 2016 Thomas Cooper rated it really liked it  ·  review of another edition
A good book, whether you're in finance, business or anything else where you seek to succeed. It took me a few reads to really get fully to grips with its teachings. The best lesson I walked away with was the importance of realising that the rulebook keeps changing & something that is true, isn't always true the second time round.
Lucas
Jun 16, 2015 Lucas rated it really liked it  ·  review of another edition
The book was interesting historically because a lot of what we are dealing with now was initiated in the 1980s and 1970s. The 1970s and 1980s were similar in terms of economic challenges to what we face now.

The reflexivity theory, while curious, is difficult to implement and further to understand holistically.

All in all though, the book is worth the read.
Luka
Mar 20, 2016 Luka rated it really liked it  ·  review of another edition
Heisenberg's principle is that mass and velocity of quant particle can not be measured at the same time because the act of measuring affects the object being measred.
Are those methods appliable for natural and social criteria, too?
Will
must read
Boris Mikhailovski
interesting ideas
Lori (Lara Britt) Sailiata
May 11, 2015 Lori (Lara Britt) Sailiata rated it it was amazing
Reread. For the 3rd (???) time. A touchstone in investment theory
Kiddonne
Oct 22, 2014 Kiddonne rated it really liked it  ·  review of another edition
Well, reflexivity does ring a bell to me; thus, a story I enjoyed following.
jeremy lao
Feb 17, 2014 jeremy lao rated it it was amazing  ·  review of another edition
Excellent book. His theory on the markets, reflexivity, experience with volatility, and reflection on the global system are insightful and the best of anyone I've read.
Delhi Irc
Location: GG4 IRC
Accession no: DL026630
Ethan Weber
This book contains incredible wisdom and insight. One of the most difficult books to read I've ever encountered. Its a times insufferably dry and dense - I don't know if I'd recommend it to others.
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George Soros is a Hungarian-American financier, businessman and notable philanthropist focused on supporting liberal ideals and causes. He became known as "the Man Who Broke the Bank of England" after he made a reported $1 billion during the 1992 Black Wednesday UK currency crises. Soros correctly speculated that the British government would have to devalue the pound sterling.

Soros is Chairman of
...more
More about George Soros...

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“The fact that a thesis is flawed does not mean that we should not invest in it as long as other people believe in it and there is a large group of people left to be convinced. The point was made by John Maynard Keynes when he compared the stock market to a beauty contest where the winner is not the most beautiful contestant but the one whom the greatest number of people consider beautiful. Where I have something significant to add is in pointing out that it pays to look for the flaws; if we find them, we are ahead of the game because we can limit our losses when the market also discovers what we already know. It is when we are unaware of what could go wrong that we have to worry.” 1 likes
“Scientific method seeks to understand things as they are, while alchemy seeks to bring about a desired state of affairs. To put it another way, the primary objective of science is truth, - that of alchemy, operational success.” 1 likes
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