The Alchemy of Finance
George Soros · 1987
Soros introduces reflexivity: market participants' biased perceptions actually change the fundamentals they're evaluating, creating feedback loops that traditional economics can't explain. This directly contradicts efficient market theory and explains why bubbles and crashes are inherent features of markets, not anomalies. Dense and demanding, but one of the deepest ideas in finance.
The case against
Reflexivity is one good idea wearing a whole book. Soros concedes his theory makes no testable predictions, then narrates a real-time diary of 1985-86 trades in prose that reads like a regulatory filing. He is a great investor and a laborious writer; the insight survives, but you will earn it page by page.
Business & Investing · the Pro canon
The case for it and the rest of the canon open with Pro.
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