Ride Bubbles, Make Billions: Easily Find The Biggest Market Trends

It is September 16th, 1992, and George Soros and Standley Drunkenmiller are making $125 million an hour while the Bank of England is hemorrhaging. By that evening, these legendary traders made over a billion dollars in ONE DAY.


With one simple concept that makes every economics department tremble: Reflexivity

In this video, I’m going to reveal:

  1. What reflexivity is and how it mints billionaires.
  2. Why reflexivity makes market movements crystal clear.
  3. And how it’s easier than you think to capitalize on the next big trend like George Soros.

But first, we need to understand the pivotal moment that turned George Soros from an unprofitable speculator to a trading titan.

Let’s rewind to 1974 when 17-year-old George found himself reading Karl Popper while studying at the prestigious London School of Economics.

And if you’re not sure who Karl Popper is, he’s widely regarded as one of the greatest philosophers of the twentieth century.

Karl put forth that no perfect knowledge exists.

At the same time, George’s economic professors argued for perfect knowledge, touting the efficient market hypothesis.

These two ideas can’t coexist, so, which one is right?

According to George, Popper is right. And a good thing for him, because if he didn’t, he wouldn’t be the multi-billionaire he is today.

After studying Popper, George had two key insights that were fundamental to his conquering the markets:

  1. Investors are fallible. They make imperfect decisions based on incomplete information.
  2. Markets are reflexive. Investors’ imperfect actions move the very markets they are a part of.

While this might seem like common sense, it has massive implications.

It means that every market move has two components:

  1. An underlying trend based in reality.
  2. A misconception related to that trend.

Now, here’s where it gets interesting:

A boom is set in motion when a trend and a misconception positively reinforce one another. And if you can identify the misconception, you can make bank – or, in George’s case, break them.

Let’s understand this through the lens of a Real Estate bubble, and see if you can spot the trend and misconception.

When credit becomes cheaper and more available, real estate activity picks up, and home prices move higher. After all, there’s more demand for the same supply.

Since real estate values are higher, there are fewer defaults as homeowners have more equity, making lending standards relax further, positively reinforcing the trend.

On the way, the trend and misconceptions are tested. If enough doubt creeps in, the bubble will burst before it gets started. But if the trend shakes off the test, it accelerates to the upside.

These tests are something that technical analysts have traded for centuries, but only with this understanding can we comprehend the reason behind them.

Eventually, an upward move becomes unsustainable, and when credit is most relaxed, enough doubt creeps in, causing lending standards to tighten, making everything move in the opposite direction: forced liquidation leads to reduced prices, increasing defaults causing further tightening.

We come full circle. 

So, how did you do? Did you spot the trend and the misconception?

  1. The trend is credit becoming cheaper and more available.
  2. The misconception is the value of the collateral is independent of the availability of credit. It’s not. It’s reflexive.

If you can spot a trend and its misconception, you’re well on your way to understanding the markets and which trends are most likely to turn into megatrends.

And there’s a reason why they say the trend is your friend.

But I’m going to add that the reversal might just be your end.

And I hope my addition to this famous adage gets etched in trading lore to potentially save your skin.

And here’s why:

In markets, heightened uncertainty expresses itself as increased volatility.

At the top, action gets incredibly volatile, and investors need to sell positions to get within reasonable open risk ranges.

This reduction in position sizing combined with deleveraging is why the market takes the escalator up and the elevator down.

And it’s also why making money on the short side is tricky. You get whipsawed if you oversize your trades. So keep them small so you can ride the elevator down, as it’ll be a bumpy ride.

Finally, there’s almost always a bounce at the bottom as volatility subsides and liquidity comes back into the market. 

Congratulations, now you’ve learned what reflexivity is, and why markets move the way they do.

And if you’ve been in the markets for any period of time, you’ve probably seen a diagram like this and can now understand the why behind the move.

But enough of the why, it’s now time for the how.

How do you identify the megatrends before the start – or at least early enough to jump on board.

For this, I’m going to tell you stories of two legendary traders capitalizing on reflexivity.

The first, Kristjan Kullamägi. He’s a Swedish swing trader who turned $5,000 into over $45 million in seven years, compounding at around 268% annually. 

By the way, his compounding hasn’t stopped, but I would rather my information be dated than inaccurate.

One of his superpowers is getting in on trends early, or as he calls them, themes.

Kristjan scans for the top 1, 3, and 6-month stock gainers and identifies the themes pushing these higher. I’m unsure if Kristjan is looking for misconceptions or just capitalizing on theme momentum, understanding human nature and that FOMO is right around the corner.

But there is one investor who does capitalize on misconceptions: Chris Camillo, an unknown Market Wizard. Chris doesn’t use fundamentals or charts but instead prefers to analyze social media trends by browsing Tiktok and Twitter to understand where Wall Street is wrong to amass his fortune. And he’s done a great job at it turning $84,000 into $42 million in just 15 years.

And for those of you asking how I do it, you got it.

I lean towards Kristjan’s approach while keeping reflexivity in mind.

For instance, let’s say crypto is picking up steam. I don’t want to hold individual cryptocurrencies because of liquidity and security reasons, so I’ll own crypto players in the stock market. 

My likely choice would be Coinbase, a cryptocurrency exchange.


It’s the most popular exchange, and it’s publicly traded. It earns a percentage of each transaction. If Bitcoin’s price doubles because of a sentiment shift, Coinbase’s revenue also doubles from the same quantity of Bitcoin traded. And since the marginal cost is near zero for each additional trade, Coinbase’s operational costs say flat while its earnings skyrocket.

As media coverage intensifies around the rising prices of Bitcoin and Ethereum, a wave of Fear of Missing Out (FOMO) motivates more people to buy in. This surge in buyer interest drives both trading volume and prices higher, significantly boosting Coinbase’s future earnings.

The link between the earnings and expectations is clear.

I expect narrative shifts to emerge to support the meteoric rise, such as “Bitcoin is going to be the global currency” or “Only 0.26% of the world population can own 1 Bitcoin. Get in before it’s too late”. 

Eventually, investors recognize that their enthusiasm is misplaced, leading to a shift in sentiment. This negative bias then begins to drive Bitcoin’s price downward, adversely impacting its financial fundamentals, which in turn reinforces the negative sentiment, causing a cascading effect and eventual bust.

By the time the bust occurs, I’m long gone. I trailed my profits using a moving average, understanding that it’s better to be 10% late than 100% too early. If there’s a climax top, I’d cut it earlier.

And yes, there are likely ways to make more money on the trade by going for higher momentum picks in the same theme, but I always prefer to take a smoother ride to the top and have enough room in the elevators to get out before it really starts to drop.

So there you have it. You’ve learned what reflexivity is, why the markets move the way they do, and how to capitalize on booms and busts.


The thing is, everything I just told you is completely useless if you don’t have the foresight to see the next big bubble or the know-how to structure your trade properly. 

The best way to learn?

Check out this article that gives a play-by-play of how George and Stanley Broke the Bank of England so you can see the masters in action.

Or ask me a question by commenting below. 👇

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