Ed Thorp, “If You Bet Too Much, You’ll Almost Certainly Be Ruined”

Ed Thorp Beat the Dealer

Guest: Ed Thorp. Ed is an American mathematics professor, hedge fund manager, and blackjack player. To beat roulette, he and the father of information theory, Claude Shannon, invented the first wearable computer. Along with innovative applications of probability theory, Thorp is also the New York Times bestselling author of Beat the Dealer, the first book to mathematically prove that the house advantage in blackjack could be overcome by card-counting. He also pioneered the use of quantitative investment techniques in the financial markets.

Date Recorded: 2/8/16

Run-Time: 58:56

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Topics: In Episode 39, we welcome the legendary Ed Thorp. Ed is a self-made man after having been a child of The Depression. He’s a professor, a renowned mathematician, a fund manager who’s posted one of the lengthiest and best investment track records in all of finance, a best-selling author (his most recent book is A Man for All Markets), the creator of the first wearable computer, and finally, the individual responsible for “counting cards.”

Meb begins the episode in the same place as does Ed in his new book, the Depression. Meb asks how that experience shaped Ed’s world view. Ed tells us about being very poor, and how it forced him to think for himself, as well as teach himself. In fact, Ed even taught himself how to make his own gunpowder and nitroglycerine.

This dovetails into the various pranks that Ed played as a mischievous youth. Ed tells us the story of dying a public pool blood-red, resulting in a general panic.

Episode Sponsor: Soothe and Lyft

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Links from the Episode:

A Man for All Markets

Beat the Dealer

Beat the Market

The Kelly Capital Growth Investment Criterion

By Meb Faber, read the transcript here.