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10-March-2006
A Review of a Review of Ed Spec! By Nicholas Taleb

Michael Lewis' review of Victor Niederhoffer "Education of a Speculator" is an example of bad review journalism. Lewis, at his best, acted as a gossip columnist discussing matters way over his head. Lewis has proven, in "Liars' Poker", his lack of interest of financial markets: His mind naively focuses on the squalor of human motives and what sensational could be brought out of it. He reminds me of Anthony Trolloppe's mother's discussion of her trip to America which makes far reaching judgments based on the American gentry's superficial domestic manners. Listening to Lewis discuss financial matters is exactly like using People's Magazine as a sociological document.

The review resembles a gossip book called "Intellectuals" by one Paul Johnson (a once-successful pseudo-scholar). It states that Bertrand Russell's fame and role in society was undeserved on grounds that Russell had (among other things) bad breath and a promiscuous lifestyle. Clearly, Johnson did not know of axiomatic set theory and could not value the invaluable contributions brought by Russell to modern mathematics and analytical philosophy. The fact that we have the axiom of choice was not a matter to mean anything to a journalistic low-thinker. Likewise, the fact that Niederhoffer, an outstanding (and exuberant) scientific trader, blurted out what was on his mind meant nothing to Lewis. It happens, however, to mean a lot to other people: those who are interested in markets and need to understand the philosophy and methodology of traders. Or the general public interested in hearing what a trader honestly has to say.

This gossip-journalism approach brings to mind a French saying: "No great mind is an intellectual giant to his chambermaid". Lewis engages in low-level sophistry: wondering why, if Niederhoffer were a contrarian, he should act as a contrarian and avoid making money. In addition, Lewis is bitter about something: Is he jealous of Niederhoffer's success ? I am myself in the process of writing a book on financial markets and my experience as a scientific trader obsessed with the meaning of randomness. I expect that Michael Lewis will focus on some of the insignificant aspects of my book (like perhaps my Levantine birth) and completely miss the point.