Thursday, November 10, 2011

Finding your own style

Before I return Mehrling’s biography of Fischer Black to the public library I thought I’d touch on another theme. Herewith some lengthy quotations that may inspire you to find your own style.

Fischer spent the early 1970s at the University of Chicago’s Graduate School of Business “safe inside his office on the third floor of Rosenwald, with Myron Scholes on one side and Eugene Fama on the other.” There he “could be a maverick without bearing the costs that everywhere else are imposed on those who refuse to conform to societal norms. He loved it.

“The own downside was the obligation to teach. No one was ever better than Fischer at working one-on-one with a student, but the subject had to be one that he was interested in learning about himself. And the student had better be interested in solving the problem … and prepared to defend his proposed solution against alternatives, even alternatives that no one except Fischer was prepared to consider. For him, the whole point of academic life was to think new thoughts, and he was interested only in interacting with people who shared that commitment.”

“Standard classroom lecturing about matters that Fischer thought had already been resolved was simply a bore, and Fischer was lousy at it. He recalled: ‘I was terrible, judging by the ratings my students gave me. I thought lectures were a waste of time for me and for my students (especially when the material is in a book). I looked for every possible excuse to cancel classes. One thing I did was to fill some classes with reviews of past exams. That worked well, so gradually I started doing more of it. Eventually, I worked out the following system.

‘I handed out lists of questions and packets of readings at the start of each semester. In each class we would discuss three or four of the questions. They would give their views and I would give my views. The students liked it, and I liked it. My ratings went from the bottom to the top, and I’m sure they learned more than when I was lecturing.’ Students would recall of his ‘Fifty Questions’ course that every year the questions stayed the same, but the answers always changed. In effect, Fischer handled teaching, which he hated, by turning it into research and intellectual dialogue, which he loved.” (pp. 186-87)

* * *

“The way that Fischer worked was to use ‘recalcitrant experience’—the expression is Quine’s—to stimulate further refinement of his theory of how the world works. Indeed, he actively sought examples of recalcitrant experience for this purpose.”

“Inconclusive was fine with him. Better to know the extent of your ignorance than to waste time building theories on insubstantial empirical foundations. More generally, he favored simply exploring the data quite directly, without very much in the way of elaborate statistical apparatus. He was not testing theories or estimating coefficients, but rather searching for new knowledge.”

“Twenty-five years later, at Goldman Sachs, he ruminated about how best to manage traders: ‘Observing a puzzle is not enough. A crooked yield curve or an unexplained stock price move is suggestive, but I generally want to know why these patterns exist before I trade. Stories can be wrong, but I’m uncomfortable trading without one. I want to know what kind of supply and demand imbalance is creating the trading opportunity.’ Such is the long shadow cast by Fischer’s early encounter with Quine.” (pp. 117-19)

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