Imagine making a single-day gain of CHF 1 billion. While it may sound unbelievable and impossible, George Soros just did that when he shorted the British pound in 1992 and became “the man who broke the Bank of England.”

To immortalize this legendary feat, Soros went on to write his book “Best Expert Account: The Alchemy of Finance” in which he recounts his experience, offers insights, and shares his view of the markets.

We’ve summarized the key points from his book below, so you can get in on his wisdom.

About the author

George Soros is considered a legend in the investing world. In fact, some even dare to call him the greatest investor of all time. His stewardship of the Quantum Fund remains a marvel, boasting a staggering average annual return of 30% over a 30-year span from 1970 to 2000. Following this impressive accomplishment, he moved on to become the chair of Soros Fund Management LLC.

What sets Soros apart from other highly successful investors is that he openly admits that he relies on instinct. That said, no one should mistake this as a lack of knowledge, for Soros is far from uninformed. His profound understanding of economic trends allows him to capitalize on his instincts effectively, leading to substantial gains.

Combining knowledge, risk tolerance, and capital, Soros has been able to take advantage of market efficiencies, daring bets even the most seasoned hedge fund managers find unnerving.

Key insights

1. Economics and stock markets don’t reflect reality as they’re greatly influenced by thinking actors (people) whose actions affect outcomes

Soros believes that perceptions drive markets. According to his “reflexivity theory,” the perception of the value of a stock simply reflects the expectations of investors about its future returns, which can in fact be wrong. These speculations impact the price of the stock, influence investor behavior, and therefore create a feedback loop where perception affects reality.

Soros’ bottom line is, therefore, to avoid investing in companies that don’t have strong foundations. While these may seem to be growing, their success could be based merely on investor expectations rather than substantial underlying value.

2. Markets are amoral

According to Soros, markets are not a force for moral good – they are agnostic, meaning they do not favor any particular moral stance. The crucial aspect is not whether decisions are morally right or wrong, but rather whether they result in a profit or a loss.

Soros stresses the importance of focusing on outcomes and the actions (or reactions) that lead to them.

Although many fundamentalists believe in market equilibrium, which assumes that investors are rational and markets will efficiently allocate resources, Soros disagrees. He argues that the concepts of reflexivity and human uncertainty undermine the idea of market equilibrium. Despite this, Soros suggests that these factors can be exploited, as he further explores in his next point.

3. The best time to make money is the market chaos

During times of disruption, those who can remain composed find the most promising opportunities. Investors can leverage the misunderstandings or desires of others by leaving emotions out of it and making rational decisions, focusing on companies' fundamentals before deciding to invest in them.

4. Power, in the form of events and relationships, has a significant impact on free exchanges

Soros writes that the global financial system comprises two types of countries: those positioned in the center and those on the periphery. International debts are denominated in the currencies of the central countries, granting them the advantage of being able to borrow in their own currencies. Peripheral countries do not have this privilege.

This puts center countries at a distinct advantage, reflecting that power relationships and political events truly impact the markets.

Center countries have the liberty of using countercyclical fiscal and monetary policies as it’s all in their own currencies. They can leverage these policies, for instance, by implementing stimulus measures during economic downturns to offset the fluctuations of economic cycles. In other words, it’s the center countries’ game and peripheral countries have to abide by their rules if they want to play.

5. Objective economic factors smooth pricing distortions in the long-term

The author’s final key point is that it’s not all just irrationality and perception. Most imbalances in exchange-traded asset pricing – influenced by the psychology of investors – are smoothed out over the long run.

This strategy is exemplified by perhaps the most prolific investor of all time, Warren Buffett. Indeed, he tends to purchase the stocks of companies he intends to invest in for decades, as shorter time frames do not allow for the full realization of fundamental analysis.


The classic investing book “The Alchemy of Finance: Best Expert Account” delves into the psychology, fundamentals, and theories of market investing. Although Soros may be renowned for breaking the Bank of England, his book has also had an immense impact, serving numerous investors and continuing to impart valuable wisdom to this day.

To recap:

  • Markets (particularly pricing) don’t necessarily reflect reality;
  • Markets are amoral;
  • One should take advantage of market chaos;
  • Power, in the form of events and relationships, has a significant impact on free exchanges;
  • Objective economic factors help smooth out inefficiencies in the long term.

And remember, as Peter Lynch once said, “In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.”

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