I HAVE made an interesting discovery. In the first quarter of this year I made more money than hedge-fund superstar George Soros. How do I know this? Because I have just finished his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

In it, the man whose enormous bets famously knocked sterling out of the European exchange-rate mechanism in 1992 gives a glimpse of his fund’s dealings between January and March. A profit eluded him.

Now my claim is only true up to a point. One day’s interest on the billions tied up in Soros’s charitable foundations would have dwarfed the tuppence ha’penny I made on my portfolio. Still, it is reassuring to us mortals that even a great thinker like Soros can get as many calls wrong as he gets right.

As the title suggests, the book is part economic treatise, part market analysis. I read it for the latter, though it would appear Soros really wrote it for the former. His Big Idea is that economists make the mistake of modelling and analysing social events as if they were natural phenomena. What they miss is the fact that each market participant’s views and actions affect the underlying fundamentals.

On a philosophical level (both Descartes and Bertrand Russell get walk-on parts in this book), thinking and reality are intertwined. Our biased views and misconceptions determine prices and shape trends – and introduce crucial uncertainty. We are part of the model.

However, it is Soros’s view of where we go next that matters most to me. The early summer share-price falls have unquestionably thrown up value in parts of the market. Is it worth picking up some of these super-cheap shares? Or is this a “value trap”?

I have been tempted, for example, to return to Mitchells & Butlers, the pubs and restaurants chain, whose shares I sold in two tranches – finally getting out in June last year. That was at 853p. Today, they trade at 255p, having been below £2 – undoubtedly less than they are worth. The break-up value is at least £1 a share higher and the company is committed to finding a way of splitting out the properties into a more tax-efficient vehicle.

On the trading front, M&B continues to lift sales and market share with its food-led offering. It faces none of the debt issues affecting rival Punch Taverns, having refinanced all its borrowings. And it now has not one but two aggressive parties on its shareholder register: Robert Tchenguiz’s R20 investment company has long held a quarter of the shares, and the Irish property-to-racing duo of John Magnier and JP McManus have recently built up a stake of about 10%.

I should have had the courage of my convictions to buy back in at around the £2 mark, but what worried me was the prospect of another, indiscriminate sell-off in the market.

It was with this in mind that I turned to Soros’s book. His reading of the past year’s events is that they amount to the pricking of two bubbles at once: American housing and credit. The contraction of credit is already well under way and Soros expects the deleveraging of banks’ and hedge funds’ balance sheets to run its course in a year. However, he said that “this time it will take much longer for growth to resume”.

Soros completed his book in March, a time of panic in the markets. That may have coloured his thinking, but his arguments are persuasive. They are enough for me to continue sitting on the cash I took out of the portfolio in 2007 and earlier this year. Markets normally overextend themselves either on the upside or downside. Chances are that this bear market has another leg to it yet.

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