Authors:
  • In certain circumstances, financial markets can affect the so-called fundamentals which they are supposed to reflect. When that happens, markets enter into a state of dynamic disequilibrium and behave quite differently from what would be considered normal by the theory of efficient markets. Such boom/bust sequences do not arise very often, but when they do, they can be very disruptive, exactly because they affect the fundamentals of the economy.

    "Theory of Reflexivity". George Soros' speech at the MIT Department of Economics World Economy Laboratory Conference in Washington, D.C., www.valuewalk.com. April 26, 1994.
Cite this Page: Citation