Going Private readers are a tough bunch to write for. Short the kind of novelty that qualifies one for a visit to Stockholm in December, elucidations of theory are unlikely to be new or other than obvious to the readership here. This puts a particular burden on Going Private's author and often prompts from her the exclamation, with apologies to Jacob Cohen (a.k.a. Rodney Dangerfield): "Tough crowd." A case in point is this missive, which arrived in Going Private's box over the weekend:
I was happy to see another edition of the usually insightful Equity Private pop up on my blog reader until I realized that it was a simply an eloquent rehash of the Soros classic, Alchemy of Finance (albeit seasoned with some details of the current credit crisis). The Soros model of reflexivity cites the "participating function" which is typically left out of the prevailing view of financial markets, despite the perverse connection of expectations on that which is expected. As Soros asserted:
1. Markets are always biased in one direction or another
2. Markets can influence the events they anticipate
Your piece, while informative, is but a shadow of the Platonic Ideal of boom/bust cycles articulated by Soros. I hope your efforts were in ignorance of the master, and not a failure of proper citation.
Though I would normally plead my case by pointing out that my incentive alignment discussion does not bear a strong resemblance to Soros' content, I fear that, in the end, I must plead "ignorance of the master."