I’ll be fine until someone sends me another piece of nonsense by Nassim Taleb, at which point, as my favorite wrestler, the Iron Sheik likes to say, “I will make him humble; old country way.”
Happily, that day has now come, and Locklin’s screed against Taleb makes for delicious reading. Among his vocabulary: clowns; impostures; mush headed absurdity; Berkeley tapwater; careen; chicken entrails and pixie dust; utile; dyspepsia; serfs; mountebanks; and “heretical alpha monkey of the quants”.
Substantively, Locklin makes a very astute comparison:
Taleb, on the other hand, is sort of the Paul Feyerabend of quantitative finance. Like Feyerabend, he is well read, a good writer and quite charming. Like Feyerabend, Taleb seems to earn his daily bread by showing up and being kind of witty. Finally, both Feyerabend and Taleb are very much Against Method. This means, effectively, they’re both intellectual nihilists. Feyerabend thought we couldn’t know anything for various reasons too silly to get into right now. Taleb thinks all of quantitative finance is nonsense and we should do away with quants.
I’m a fan of Feyerabend, which is maybe why I’m a fan of Taleb as well: both of them force us to carefully examine things we believe mainly because clever and successful experts tell us that they’re true. And I haven’t asked Taleb about this, but I suspect that he wouldn’t be very upset to be called “the Paul Feyerabend of quantitative finance”. Certainly the two share an interest in thinking big.
Locklin ends his blog entry by saying that a successful quant like Jim Simons is “making money more or less proving people like Taleb wrong”. To use Locklin’s own analogy, that’s like saying that a successful physics experiment more or less proves Feyerabend wrong. Which given that Feyerabend was a successful physicist before he became a philosopher, is a bit weird.
It’s perfectly possible to spend a lifetime in science without ever having to grapple with or worry about Feyerabend’s philosophy — just as it’s perfectly possible to spend a lifetime in finance without expending any time on Taleb’s arguments. Many of those scientists and financiers will be very successful. But for those of us who want to take a step back and re-examine the foundations of science, or finance, then grappling with Feyerabend and Taleb is I think a useful and illuminating thing to do.
Update: Taleb emails to say he considers himself closer to Hayek than to Feyerabend.