The House Always Wins. Then Ed Thorp Came Along

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Ed Thorp used math to become the first person to beat the casinos at blackjack. Then he changed the way Wall Street thinks about investing.

Podcast from NPR below

Beat The Dealer – Ed Thorp

Professor Thorp presents the first accurate system for consistently winning the modern casino game, Blackjack. In this game — also known variously as “21,” “Van John,” “Pontoon,” “Vingt-et-un,” and “Ein-und-zwanzig” — the player can gain and keep a decided advantage over the house by relying on the strategy delineated here. This strategy, based on the mathematical theory of probability, was developed by Professor Thorp with the aid of an electronic computer. The essentials, consolidated in a few simple charts, can be understood and memorized easily by the average player. One of the charts shows how variations in casino rules influence the players chances and thus enable shim to select an advantageous casino. The presentation of the system readily lends itself to the rapid play normally encountered in casinos.

Also see Ed Thorp’s “newerish” book – A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

The incredible true story of the card-counting mathematics professor who taught the world how to beat the dealer and, as the first of the great quantitative investors, ushered in a revolution on Wall Street.

A child of the Great Depression, legendary mathematician Edward O. Thorp invented card counting, proving the seemingly impossible: that you could beat the dealer at the blackjack table. As a result he launched a gambling renaissance. His remarkable success—and mathematically unassailable method—caused such an uproar that casinos altered the rules of the game to thwart him and the legions he inspired. They barred him from their premises, even put his life in jeopardy. Nonetheless, gambling was forever changed.

Thereafter, Thorp shifted his sights to “the biggest casino in the world”: Wall Street. Devising and then deploying mathematical formulas to beat the market, Thorp ushered in the era of quantitative finance we live in today. Along the way, the so-called godfather of the quants played bridge with Warren Buffett, crossed swords with a young Rudy Giuliani, detected the Bernie Madoff scheme, and, to beat the game of roulette, invented, with Claude Shannon, the world’s first wearable computer.

Here, for the first time, Thorp tells the story of what he did, how he did it, his passions and motivations, and the curiosity that has always driven him to disregard conventional wisdom and devise game-changing solutions to seemingly insoluble problems. An intellectual thrill ride, replete with practical wisdom that can guide us all in uncertain financial waters, A Man for All Markets is an instant classic—a book that challenges its readers to think logically about a seemingly irrational world.


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