Gladwell's Bad Bluff

I love the books by Malcolm Gladwell (Blink, Tipping Point, Outliers). I love his writing style.

However it's a shame, though, that his latest well-articulated article in the New Yorker about Jimmy Cayne and Wall Street ends with a bunch of nonsense. His article (dated July 27) is at:

http://www.newyorker.com/reporting/2009/07/27/090727fa_fact_gladwell?currentPage=all

His supposition is that the collapse of Bear Stearns was in part a result of the overconfidence of Jimmy Cayne, the firm's former chairman and CEO. He suggests that the roots of the recent Wall Street crisis were in considerable part psychological.

Skipping over the selective quotes from Cayne to paint him in a Machiavellian light, and a dissertation on the British Empire military failure at Gallipoli in 1915, we wind ourselves into poker, without mentioning the game:

Winners know how to bluff. And who bluffs the best? The person who, instead of pretending to be stronger than he is, actually believes himself to be stronger than he is.

But Gladwell's target is the game of bridge. The co-respondent in Cayne's divorce was bridge we are told, and we move on to how Cayne got hired by bridge player Alan (Ace) Greenberg, and how later bridge expert Warren Spector ended up co-president of the firm.

Then the article goes completely off kilter. Gladwell states that "Bridge is Wall Street in miniature", but after concluding there is an affinity between the two, he does note that bridge is just a game. However at this point he is implying that bridge players good at the game might believe they are good at Wall Street.

He mentions that Cayne attended the "Spingold K.O. bridge tournament" in Nashville (actually the Summer 07 NABC, in which Cayne played in the Spingold event). Then his article descends to the equivalent of the beaches at Gallipoli:

Cayne must have come back from the Spingold bridge tournament fortified in his belief in his own infallibility.

At this point we know that Gladwell never talked to a serious tournament bridge player before writing his article.

Cayne played in Nashville with one of very best US pros (Seamon), and four world champions from Italy (Fantoni, Lauria, Nunes, Versace). This team was seeded second in the event, but lost in the round of 16. Cayne finished the tournament with only 70.19 masterpoints after assembling one of the best teams possible, and arranging for coaching and support of the team. The very last thing Cayne would think after Nashville was that he was infallible. From what I saw on BridgeBase afterwards, Cayne increased his online playing time, trying to improve his game by playing most days.

This leads to another criticism of Cayne in Gladwell's article, that I've seen repeated elsewhere. In Gladwell's article he notes that for the Nashville tournament, Cayne was out of the office for nearly half the month. Others have noted Cayne's attendance in the spring of 08 in Detroit (same team, out in the round of 16 in the Vanderbilt). These people mistakenly assume that Cayne was unavailable for work by attending the bridge tournament.

Cayne was on a six person team, and only played half the boards of their team matches. That means for most days, Cayne was only spending about 4 hours a day on bridge at Nashville and Detroit, not including any days he played in pairs events. For the other 20 hours a day available to Cayne, he had plenty of hours to devote to work, and we all know that technology makes remote work almost like being right at the office, for our better or worse.

In short, Gladwell's article is thinking in miniature.

As to Cayne, he is losing to Canada in a practice match as I write this - not exactly overconfident just yet.