Navigating behavioural biases, market volatility, uncertainty while investing

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Subscribe to enjoy similar stories. In an October 2009 lecture at Central European University, George Soros, the legendary hedge fund manager, shared his views on the concepts of fallibility and reflexivity, first introduced in his book The Alchemy of Finance (1987). Soros reflected, "In the course of my life, I have developed a conceptual framework that has helped me both to make money as a hedge fund manager and to spend money as a policy-oriented philanthropist.

But the framework itself is not about money—it is about the relationship between thinking and reality, a subject extensively studied by philosophers." Soros explained these ideas succinctly: "I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility.

The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity." Read this | Swiggy IPO: How investors justify risky pre-listing trading He further noted that financial markets often exhibit self-reinforcing, but eventually self-defeating, boom-bust cycles, a phenomenon observable in other areas as well. Soros's philosophy—a blend of financial returns, personal experience, and economic theory—proved invaluable during the 2008 financial crisis.