Summary: Soros explains here his key analytical principle of reflexivity - essentially a positive feedback loop - in the context of boom-bust cycles in financial markets and economies, and its applications in his extraordinarily successful "global macro" trading system during the 1970s, 80s, and early 90s.

He gives unique contrarian insights into our understanding of supposedly cut-and-dried economic and financial ideas, such as his trenchant denial of the efficient markets hypothesis and financial markets equilibria. He draws surprising links between economic phenomena which hitherto were supposed to be independent of each other, the best example being his emphasis on the propensity for bank lending to reflexively influence the collateral values of the financial assets which it finances in such a way as to lead to a boom-bust cycle.

That mainstream economists would quibble with Soros's ideas are to be expected, for economists are known for being unreasonably disputatious and uncommonly sensitive to outsiders' criticisms of their theoretical sacred cows. But in the analysis of market trends and dislocations, and trading opportunities, I know where I would put my money, given a choice between academic economists and Soros.

Success speaks for itself. Soros applied his theories so successfully that he became the most successful hedge fund manager ever, his flagship Quantum Fund generating an average annual return of 30%+ between 1969 and 1995.

One cannot but admire his tremendous courage, for example, in taking on the Bank of England and breaking its back, as it were, in his famous 10 billion dollar Sterling short trade in 1992 which netted him a cool billion, and made him a legend among traders and feared by central bankers worldwide. His honesty in admitting his missteps, and coolness with which he analysed his failures, is equally impressive, and sets an example for all professional investors.

George Soros is a not just a legend, but a genius with one of the finest analytical minds of his time. He elevated trading to a fine art, an alchemy of which he was an inimitable wizard.