#93 Ed Thorp (A Man for All Markets)

What I learned from reading A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by Edward Thorp.  ---- [0:01] Ed Thorp’s memoir reads like a thriller—mixing wearable computers that would have made James Bond proud, shady characters, great scientists, and poisoning attempts. The book reveals a thorough, rigorous, methodical person in search of life, knowledge, financial security, and, not least of all, fun. Thorp is also known to be a generous man, intellectually speaking, eager to share his discoveries with random strangers.   [1:23] Ed Thorp is the first modern mathematician who successfully used quantitative methods for risk taking—and most certainly the first mathematician who met financial success doing it.   [3:19] Ed was initially an academic, but he favored learning by doing, with his skin in the game. When you reincarnate as practitioner, you want the mountain to give birth to the simplest possible strategy, and one that has the smallest number of side effects, the minimum possible hidden complications.  [4:33] As Warren Buffet said: “In order to succeed you must first survive.” You need to avoid ruin. At all costs.  [6:48]  It is vastly less stressful to be independent—and one is never independent when involved in a large structure with powerful clients. It is hard enough to deal with the intricacies of probabilities, you need to avoid the vagaries of exposure to human moods. True success is exiting some rat race to modulate one’s activities for peace of mind.  [7:51] Read the forward by Nassim Taleb  [9:14] Ed’s 4 rules for learning  First, rather than subscribing to widely accepted views—such as you can’t beat the casinos—I checked for myself.  Second, since I tested theories by inventing new experiments, I formed the habit of taking the result of pure thought—such as a formula for valuing warrants—and using it profitably.  Third, when I set a worthwhile goal for myself, I made a realistic plan and persisted until I