After an introduction and my reflections on Soros' life and past, I want to introduce you to a central element of his philosophy - the theory of reflexivity.
In this article we will explore the theory of reflexivity itself, but not only.
We will see how this "failed philosopher" applied his own theory, and created an empire from it. Eventually we will observe how Soros is a paradox in himself. Plus, I'll add some takeaways for you from reflexivity and how to apply some fundamentals concepts in your life.
This concept is intellectually demanding.
Don't trust my word, go listen to him and try to stay focus...
It explains how Soros perceives and interacts with reality and, consequently, how he actively reshapes it.
The theory of reflexivity
George Soros introduced a powerful concept known as reflexivity, which explains how human perceptions influence reality itself. Here’s a breakdown of this theory.
Markets don’t reflect reality, they shape it. He believed:
→ Market participants act on perceptions, not facts.
→ Those perceptions influence outcomes.
→ Those outcomes reinforce the original perception.
It creates a feedback loop: a reflexive spiral.
➡️ Humans never perceive reality objectively
We all interpret the world around us through unique lenses: shaped by our beliefs, emotions, expectations, and past experiences.
As a result, each individual lives within their own version of reality, subtly yet distinctly different from anyone else's.
This subjective perspective constantly shapes our interactions and interpretations.
In simple words: we are all the center of our very little world, and live in some kind of parallel realities.
➡️ Our perceptions directly guide our actions
What we believe impacts our decisions, behaviors, and everyday actions.
For example, if investors firmly believe that real estate prices will rise in an area, they act accordingly, they buy properties.
And as a consequence, this collective behavior indeed drives up property prices, transforming an initial belief into an actual market phenomenon.
➡️ Our actions then tangibly modify reality
When a belief gains widespread acceptance, it transitions from opinion to concrete fact through cumulative actions.
A belief initially based on speculation or even misconception can become a tangible reality simply because enough people act as if it were true.
This perpetual loop is what Soros calls reflexivity:
Perception → action → real modification of the situation → new perception based on this modified reality → further actions… and the cycle continues indefinitely.
Read further about Soros' general theory of reflexivity:
Is reflexivity the weapon behind Soros' empire?
George Soros is a billionaire, yes. But he’s also a self-described failed philosopher.
In my opinion, his greatest weapon wasn't his capital, it was this theory. Let me explain:
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