The stories they trade on…
May 30, 2007
Interesting post picking up on a point by Derman about evaluating traders in terms of the stories they trade on. Suspect this would horrify empirically minded traders like Taleb and Niederhoffer. For Taleb, stories are just noise, inductive reasoning straight out of Mediocristan. And for the Galton influenced Niederhoffer, counting is everything.
If we take a Taleb style epistemological perspective, Derman is putting too much focus on a priori reasoning.