How can investors and speculators tell foolish, theoretical and practical investing/trading schemes apart? In his August 2002 paper entitled “Cranks, Academics and Practitioners”, former head of quantitative strategies at Goldman Sachs Emanuel Derman briefly circumscribes this question. He notes that:
“…[A]s I skimmed through the crank file I found it hard to feel superior. Instead, …I always saw a pale reflection.”
“Holy [the crank], holey [the academic], wholly [the practitioner]. Which approach is best? Sometimes you can’t even tell which approach is which. Finance, after nutrition and psychology, may be the field in which it’s hardest to distinguish between a really enthusiastic academic or practitioner and a genuine crank…”
“Crankademic? Pranktitioner? The real thing? Can one devise a Turing test to tell the difference? The mind reels, boundaries blur, not a bad thing really.”
In summary, it seems that nature to a significant degree favors diversity over survival of the fittest.
Consider reading the entire one-page essay.
