According to Soros’s pet theory of ‘reflexivity’, financial markets cannot be regarded as perfectly efficient, because prices are reflections of the ignorance and biases, often irrational, of millions of investors. ‘Not only do market participants operate with a bias’, Soros argues, ‘but their bias can also influence the course of events. This may create the impression that markets anticipate future developments accurately, but in fact it is not present expectations that correspond to future events but future events that are shaped by present expectations.’70
