EP 109: The man who beat the dealer, and later, beat the market – Edward Thorp

Aaron Fifield Podcast 2 Comments

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.
edward thorp interview

Edward Thorp: Math professor, inventor, best-selling author, hedge-fund manager, gambler.

Links and resources mentioned:

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