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macro

Reflexivity Cascade

"Markets move reality, not just reflect it"

Based on Soros's theory: Asset prices affect fundamentals, which change prices, creating a self-reinforcing loop (Boom/Bust). Betting on the loop.

How It Works

  1. 1

    Identify positive feedback loop (e.g., Tech stock rises -> Cheaper capital -> More R&D/Acquisitions -> Better Earnings -> Stock rises)

  2. 2

    Ride the loop up (Boom)

  3. 3

    Identify when the loop breaks (Negative Feedback)

  4. 4

    Short the loop down (Bust)

Key Mechanics

Cost of Capital feedback

Wealth Effect

Collateral value

Confidence contagion

Regulatory Context

None. This is the nature of markets.