Derman and I

I notice that Emanuel Derman is about to release his new book. The tome seems to deal with how the failings of finance theory can impact the world. This sounds very close to what my Lecturing Birds attempted to do. There are big differences though.

For one, Derman knows much more than I do about the subject matter.

He is also a better writer.

But I suspect that there is an area where I may have a slight comparative advantage. I am an amateur, a dilettante, a stranger in a strange land. Derman is a pro in the field. While he is way more open and honest than most other pros in this debate, he may not want to be more open and honest than necessary. In other words, he probably can´t or doesn´t want to be a denunciator. He can´t or doesn´t want to be too critical or too cynical. I, on the other hand, was able to be stringently accusatorial because I had no allegiance but to the evidence I unearthed and what such findings dictated me to conclude. Derman can highlight VaR´s weaknesses but he might not want to call for its banning. Derman can talk about BSM´s flaws, but he might not want to embrace Taleb-Haug. Derman can denounce the unrealism of models but he might not want to lead a campaign against the (possibly impractical, probably lethal) modelling of finance.

So I eagerly await the release of Derman´s new pearl. I have no doubt that it will make for brilliant and enlightened reading. But I don´t expect to find any calls for revolution. I don´t expect any statement a la "models can be so demonstrably dangerous that we should actively protect the world from them". And that, in a way, is a pity. For Derman can garner many more followers than my humble Lecturing Birds ever could. He, as an elite member of the practising and teaching quant community, could be the messiah that parts the waters and leads the many towards a paradise land where implacably destructive mathematical trickeries don´t wreak untold economic and social havoc.