I’m not sure how to best say this, but Edward Thorp, is kind of a big deal…
Not only in the world of financial markets, but he’s also a household name amongst the gambling scene. He’s the man who beat the dealer, and later, beat the market.
It was during the late-50’s and early-60’s, when Ed, a math genius and professor at MIT, took on the challenge of discovering a way to get an edge playing gambling games such as blackjack, roulette and baccarat. Long story short; Ed won—and he’s now considered the father of card counting.
From there, the next obvious move for Ed was to take on financial markets—which he also did with a great degree of success. His first hedge fund, Princeton Newport Partners, achieved an annualized return of 19.1% (before fees) over a 19-year period, with 227 of 230 months being profitable—the worst monthly loss being less than 1%.
Ed’s most recent book, A Man For All Markets, is now available on Amazon.
Topics of discussion:
- Ed speaks about his childhood, The Great Depression, his first job, where his fascination with math and science begun—and learning how to make bombs!
- How a math professor at MIT became interested in blackjack, roulette, baccarat, and in general, beating the dealer. But also, why money was never the motive…
- The story of how Ed partnered with infamous underworld figure, Manny Kimmel, and more than doubled a sizeable bankroll during their short stay in Las Vegas.
- How the casinos dealt with other known card counters (during the 1960’s), and the various ways they tried to put an end to Ed—who publicly shared his strategy.
- Ed’s attempt at beating the market, how he describes an edge in gambling and an edge in trading, and how he used Kelly Criterion for money management.
Links and resources mentioned:
- A Man For All Markets [Amazon]
- The Kelly Capital Growth Investment Criterion [Amazon]
- Beat the Dealer [Amazon]
- Casino, 1995 [Wikipedia]
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