The man who beat the casinos, then the markets

Great 'Lunch with the FT' between John Authers and Ed Thorp. Some highlights:

He no longer gambles. “I enjoyed the process of learning something new and being in a new milieu. Once it became a routine grind, I wasn’t interested,” he says. “Blackjack isn’t very interesting because the stakes are so small. If you are used to betting millions in the market, betting a few thousand in the blackjack tables doesn’t mean anything.”


Instead, he put his insights from blackjack to work on investments, using advanced mathematics to develop strategies based on buying stocks in large numbers, where the odds were in his favour, just like counting cards. Having turned investment into a mathematical problem, he solved it, and programmed computers to help him.
Why was he able to make so much money from this when others do not? “People aren’t good processors of information. Not collectively. Witness the recent political campaign in America. They can be fooled by fake news easily.”
And there’s another point. “One of the things that’s served me very well in life is having an extraordinary bullshit detector.”


This also explains why he did not make more of an effort to keep his hedge fund. “I realised Princeton would have taken over my life. I would have spent my life just accumulating money.” His secret was to realise that he had enough.


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