The Alchemy of Finance (Wiley Investment Classics) | 
 enlarge | Author: George Soros
Creator: Paul A. Volcker
Publisher: Wiley
Category: Book
List Price: $19.95
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Rating:  22 reviews
Sales Rank: 6022
Media: Paperback
Number Of Items: 1
Pages: 416
Shipping Weight (lbs): 1.1
Dimensions (in): 8.8 x 6.1 x 1.3
ISBN: 0471445495
Dewey Decimal Number: 332.6
EAN: 9780471445494
ASIN: 0471445495
Publication Date: July 29, 2003
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Product Description
New chapter by Soros on the secrets to his success along with a new Preface and Introduction.
New Foreword by renowned economist Paul Volcker
"An extraordinary . . . inside look into the decision-making process of the most successful money manager of our time. Fantastic." -The Wall Street Journal
George Soros is unquestionably one of the most powerful and profitable investors in the world today. Dubbed by BusinessWeek as "the Man who Moves Markets," Soros made a fortune competing with the British pound and remains active today in the global financial community. Now, in this special edition of the classic investment book, The Alchemy of Finance, Soros presents a theoretical and practical account of current financial trends and a new paradigm by which to understand the financial market today. This edition's expanded and revised Introduction details Soros's innovative investment practices along with his views of the world and world order. He also describes a new paradigm for the "theory of reflexivity" which underlies his unique investment strategies. Filled with expert advice and valuable business lessons, The Alchemy of Finance reveals the timeless principles of an investing legend.
This special edition will feature a new chapter by Soros on the secrets of his success and a new Foreword by the Honorable Paul Volcker, former Chairman of the Federal Reserve.
George Soros (New York, NY) is President of Soros Fund Management and Chief Investment Advisor to Quantum Fund N.V., a $12 billion international investment fund. Besides his numerous ventures in finance, Soros is also extremely active in the worlds of education, culture, and economic aid and development through his Open Society Fund and the Soros Foundation.
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| Customer Reviews: Read 17 more reviews...
 Good discussion on feed back loops but fails to deliver solid advice. August 18, 2008
How to become a billionaire? don't look here. In the end Soros provides no cookbook ways to become a billionaire. He is very intuitive and that ultimately determines his success. In the book, Soros documents his investment experience as if each is a scientific experiment. The price movement ultimately determines if his theory is correct. If he is wrong he dumps his investment. Extreme discipline. Most of us claim the market (or Mr. Market as Buffet says) is wrong and over time we will be right. Soros claims that price makes its own realities. The way he uses leverage is also a mystery at times he appears to be completely un-leveraged - rare in the hedge fund world.
The only gold in the book is his discussion of feed back loops. This I feel is so relevant to today's financial and real estate crisis. In a rising housing environment Loan to Value ratios go down, this creates success for the lender. The desire to loan is high and the supply of available money drives up prices further feeding this loop. In a declining real estate model the loan to value ratio increases exposing the lenders risk making it undesirable to lend no matter what the interest environment. The lender is stuck he can hope that his loan portfolio will be paid down or he can sell them for a loss in the open market. With loans hard to find and lenders wanting more money and higher qualifications from borrowers this assures there will be fewer buyers (buyers market). This feeds the downward loop with loan to value ratios rising even more as prices fall.
 hard to follow August 12, 2008
Honestly this book was hard to follow and I'm still not sure how Soros does it. He is an excellent thinker but I think this book was over the top for me.
 Soros's uncertainty principle is a vague form of Keynesian Uncertainty,not Heisenberg uncertainty May 27, 2008
Soros has written a thoughtful and interesting book.However,there is nothing that is new theoretically.It was all said in a much more detailed and specific form in Keynes's A Treatise on Probability(TP;1921),where uncertainty(Soros's uncertainty principle-see pp.6-10,40) was analyzed mathematically using the variable called the weight of the evidence,w, in chapter 26( the weight of the argument in chapter 6 provided the logical analysis).Keynes used the term uncertainty in the GT to denote the same basic phenomenon applied to decision making involving a significant lack of knowledge and information on (a) investment in long lived durable capital goods subject to technological innovation over time(Daniel Ellsberg's nearly identical concept of ambiguity improves on Keynes's completely original formulation),(b)financial markets, and (c)liquidity preference decisions concerning the amount of liquid assets to hold for speculative purposes.Keynesian expectations are liable to sudden changes because they are not representable by the normal distributions's standard deviation(Risk),which is the basic foundation of E Fama's Efficient Market Hypothesis,Milton Friedman's Monetarism,Robert Lucas's rational expectations,and Prescott and Kydland's real business cycle theory,etc.Keynes's analysis appears in chapter 12,pp.239-241 of chapter 17, and in pp.314-320 of the General Theory(1936;GT).It is interesting to note that Soros's own method of dealing with uncertainty,by using one's instinct and intuition ,is identical to the manner in which it was handled by Keynes.
Practically all of the examples from the financial markets used by Soros to show how his uncertainty principle(the reference to Heisenberg's uncertainty principle is defective since the probability distributions are known.What Heisenberg meant by uncertainty was risk.Only one of the two hypothesized probability distributions in Heisenberg's example can exist at any one moment of time) is operationalized could just as easily have been mistaken for Keynes's chapter 12 analysis in the GT.The value in Soros's book is that it provides a more modern set of examples that updates Keynes's chapter 12 analysis of how uncertainty impacts decision making.Risk is a very special case that occurs when there is no uncertainty about the future.Uncertainty automatically makes probability estimates indeterminate.They become intervals.
Soros will have to be much more specific in the future about his uncertainty principle(reflexivity) so that a reader will be able to differentiate what Soros has done from what Keynes did(one must also mention Frank Knight's and Joseph Schumpeter's contributions in this area,although they are not nearly as specific and technical as the contributions of Keynes and Ellsberg).
Soros needs to be devote much more time to reading and digesting Keynes's works.The few one liners that refer to Keynes in this book illustrate that Soros has not done all of his homework yet.A clear cut comparison -contrast between Keynes and Soros would allow a reader to decide what is original in Soros's approach and what is merely a variation on Keynes's theme of uncertainty impacting many of the most important financial and investment decisions that will determine the future.
 Unreal!! April 24, 2008
1 out of 10 found this review helpful
I ordered the wrong product and I requested that the order be cancelled. I submitted my request on a Friday. I did not get a response until Monday afternoon. My request was made before the ship date but seller would not cancel. Now I have to go through the trouble of returning it.
Poor communication!!!
 obfuscation at its finest April 11, 2008
1 out of 2 found this review helpful
I found this book to be quite disappointing. Soros talks about his financial investments with extremely dense prose, using some words I think are made up, and thoroughly unenlightening. He relates his "experiments", but they are not real ones in the sense of controlled scientific experiments. graphics annotations are unhelpful, tables of trades unenlightening.
As successful as he was/is, I was excited to get this book, but cannot recommend it at all.
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