“My financial success stands in stark contrast with my ability to forecast events. In this context, we must distinguish between events in financial markets and events in the real world. Events in financial markets determine financial success; events in the real world are relevant only in evaluating the scientific merit of my approach.
Even in predicting financial markets my record is less than impressive: the best that can be said for it is that my theoretical framework enables me to understand the significance of events as they unfold—although the record is less than spotless. One would expect a successful method to yield firm predictions; but all my forecasts are extremely tentative and subject to constant revision in the light of market developments. Occasionally I develop some conviction and, when I do, the payoff can be substantial; but even then, there is an ever-present danger that the course of events fails to correspond to my expectations. The concept of the “bull market of a lifetime” is a case in point: it was highly rewarding in Phase 1 but it became more of a hindrance than a help in Phase 2. My approach works not by making valid predictions but by allowing me to correct false ones.
With regards to events in the real world, my record is downright dismal. The outstanding feature of my predictions is that I keep on expecting developments that do not materialize. During the real-time experiment I often envisioned a recession that was just around the corner, but it never occurred….” –George Soros, The Alchemy of Finance
Related previous posts (see quotes from Hendry and Taleb in these posts relating to Soros and the quote above):