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Here is a quote by Soros:"...financial markets are envisaged as playing an essentially passive role; they discount the future and they do so with remarkable accuracy. There is some kind of magic involved and that is, of course, the magic of the marketplace where all the participants, taken together, are endowed with an intelligence far superior to that which could be attained by any particular individual. I think this interpretation of the way financial markets operate is severely distorted. That is why I have not bothered to familiarize myself with efficient market theory and modern portfolio theory, and that is why I take such a jaundiced view of derivative instruments which are based on what I consider a fundamentally flawed principle."So, he rejects EMH and modern porftolio theory - both subjects usually embraced by the quant community. I am also reserved to them, but I admit I have paid some attention to them and also I don't have his money . So, funniest thing is how someone who basicly says: "screw the economical theory" and trades among people who use such theories- now has 9 billion dollars. Simply put.

replication is a lie that feeble academics have clung to (kurtosis set to 3) to pay their summer salaries! Derivative pricing "models" have been embraced by semi-litterate salesmen to get paid UPFRONT their stake of the "arbitrage" (sic) Lame "valuation" quants (sometiomes effectively reporting to head of sales!) keep parroting "martingale" rubbish - that has discredited the derivative universe. I disagree that derivatives are inherently harmful (despite the corrupts modeling regime) - one of the main challenge is counterparty risk. Quant strategy should of course try to account for these things - not be stuck to "martingales" "complete market" "unique arbitrage free vol surface" like a bunch of religious zealots - only to benefit the ~ 100 IQ salesman in getting paid upfront (without fessing up to the residual risks!)...t's a shame..did not have to be...

Soros despises EMH at least since he achieved his worldwide fame after breaking the Bank of England ERM in 1992. Most successful hedge fund managers (defined as still surviving and have positive accumulated pnl) are probably similar. Asset managers are ones tend to stick EMH and "modern" portfolio theory by the book.People overlooked the most important thing about EMH: the H means it is just a hypothesis.

QuoteOriginally posted by: PlasticSaberSoros despises EMH at least since he achieved his worldwide fame after breaking the Bank of England ERM in 1992. Most successful hedge fund managers (defined as still surviving and have positive accumulated pnl) are probably similar. Asset managers are ones tend to stick EMH and "modern" portfolio theory by the book.People overlooked the most important thing about EMH: the H means it is just a hypothesis.I think people overlook the most important thing about EMH: the "E" means it applies only to efficient markets . I believe that EMH is correct and speaking of George Soros - he made most of his fotune by using something he calls: "reflexivity" - I call it a way to monopolize the market by executing large orders and driving supply/demand in your direction. Yes, you can make 10$ billion since this is defintely a risk free condition. Now, speaking of Buffet - he made most of his fortune in insurance, which is defintly a game with positive expectation - since people would pay you against events that would probably either never occur or once occured will usually not compensate nor overcome your earnings. And...yes there are successful technical analizers and quants. But...are those quants and traders REALLY succesful? Consider this example:1 million people toss a coin. Every person who tosses a coin is called: "trader". The trader "invests" in either head or tail.Every coin toss is called a "deal".The trader executes about 100 deals per year. On every deal the trader earns or loses money based on the outcome vs her expectation. What is the probability that one of those traders will almost surely(mathematically: 99%) earn money within 100 consecutive deals? Assuming that the traders invests in heads because she believes that heads have value ...the probability of getting 100 heads in a row for a single trader in this case is: >99% - which is even more than the mathematical definition of "almost surely".One of those "traders" is called Warren Buffet. Good...so we have successful "traders"??? Highly unlikely - we just have stupid and lucky people . To quote Neils Borh once again: "Prediction is hard - especially on the future".P.S.Neils Borh is the man who proved Einstein wrong...generally speaking.

QuoteOriginally posted by: somedevil1 million people toss a coin. Every person who tosses a coin is called: "trader". The trader "invests" in either head or tail.Every coin toss is called a "deal".The trader executes about 100 deals per year. On every deal the trader earns or loses money based on the outcome vs her expectation. What is the probability that one of those traders will almost surely(mathematically: 99%) earn money within 100 consecutive deals? Assuming that the traders invests in heads because she believes that heads have value ...the probability of getting 100 heads in a row for a single trader in this case is: >99% - which is even more than the mathematical definition of "almost surely".I don't get it. Are you trying to say 100 heads in a row (for a fair coin) is an event much much more frequent than one out of a million times ???