Hmmm. I'd tried to get some discussion on Burry going a while ago (posts on the Vanity Fair excerpt from Michael and the 60 Mintues segment with Burry and Lewis) and got little traction. I am not sure I get where this thread is going, but being a lot closer to finance than most people and an undiagnosed AS in Burry's vein and in his age group, I think I'd share some thoughts.
1. Burry did NOT have better information than most players in these markets. He might be said to have a more thorough thought process and a different perspective. There are hundreds, if not thousands of NTs closer to the action that would have had better information. Consider that Burry basically made his money by having better insights than all the traders and researchers at the big banks who 1) would have had more resources at their disposal, 2) been able to see the moves of the markets much more easily, and 3) been in social and professional networks that would be good at sharing information, even sharing ostsensibly illegal information via clever tricks that satisfied the letter of the law.
2. It is obviously silly to claim AS superiority. It is not silly to claim that AS people, by virtue of being different, improve humanity substantially. I am not saying Burry's success is a great boon to humanity, I am saying that keeping the Burrys of the world on the sidelines is deeply, deeply damaging to humanity. I heard Lewis speak this week and he was emphatic, and I think rightly so, that the being outside of the action was crucial to seeing the lies in the housing market and in the financial services industry. Most players in the industry had unspoken pact to keep the madness going. This is the bad side of NT behavior, and to the extent AS people don't fall for these 'trends', our awkwardness and lack of grace should be seen as a relatively small price to pay for our providing more diverse perspectives.
I don't want to belabor this point too much, but there is a whole body of thought on complex systems and diversity and stability that comes to mind. Basically, any complex system where a huge number of players are operating on the same assumptions is going to collapse sooner or later. A diversity of opinions, that is players operating on varied assumptions and with varied goals, is vastly more stable. This is the social value of neurodiversity: while we are frequently at odds with NT society, we provide it with a very, very valuable service, that of improving stability.
3. The bit about AS people 'causing' the financial crisis has to do with a very narrow set of issues. The people in question, risk managers (who are NOT accountants, btw), are charged with the finding the downside to the activities of the profit generators at a financial institution and acting to mitigating the damage. In the last few decades, this field has gone from being the province of greybeards to one for quantatitive superstars. Being quantatitively gifted screams AS to many people. But the real intellectual issue is the that mathematics tends to force a focus on a few narrow issues, hence the charge of AS people 'causing' the financial crisis. It does bear repeating that most conventional risk management formulas would have forced a focus on a few narrow issues. The most easily conveyed 'narrow issue' is the quantatitive idea that risk is equivalent to standard deviation and that all price movements are truly random, this hides the fact that prices move wildly. The problem with noting that the most naive quantative applications force a narrow view of risk is that these risk management types are the least likely to be listened to in bank. I.E. they may have been way wrong, but nobody was listening to them anyway.
Please feel free to follow up or raise additional points. I would enjoy discussing this with any of you.
16 Mar 2010, 4:40 pm
