Edward O. Thorp

The book starts with some excellent anecdotes of Thorp working with Claude Shannon. But it falls apart when Thorp starts talking about how special he is. I'm still not sure that he has done much other than make a lot of money, but to Thorp his money apparently is proof of his worth. We're supposed to be impressed by his Ferraris?! Never mind that a lot of his money was made in collaborations with literal criminals. Thorp of course declaims any knowledge of their crimes, as if this makes absolves him of any responsibility. (Thorp also discovered Madoff's Ponzi scheme 18 years before it collapsed—of course he did nothing about it.) The book collapses in the second half, when Thorp shares his utterly pedestrian "insights" on financial markets. If you haven't yet heard of inflation or compound interest, I won't spoil it for you.

> I made a practice of holding back part of [my chemical sample] so that, if this were done to me, I could prove that I had correctly analyzed whatever I had. On the very last sample given us to evaluate that semester, I was told I got it wrong. I knew better, and to prove it I asked that the part I had saved be tested. The decision on my appeal was left to the teaching assistant for my lab sections, who refused to act. The points I lost caused me to end the term in fourth place rather than first. Outraged, I did not enroll in chemistry the second semester and changed my major to physics

> So this was the setting when Claude Shannon and I, in September 1960, set to work to build a computer to beat roulette. So far as we knew, everyone else thought physical prediction was impossible.

> Claude taught me to juggle three balls, which he did while riding a unicycle. He also had a steel cable tied between two tree stumps and walked along it, encouraging me to learn with the aid of a balance bar. He could do any two of the three tricks together: juggle three balls, ride the unicycle, and balance on the tightrope, and his goal was to be able to do all three at once

> One day I noticed two huge pieces of Styrofoam that looked as if they could be worn like snowshoes. Claude said they were water shoes that enabled him to “walketh upon the water,” in this case the Mystic Lake in front of his house

> The Princeton office hired him. The five top people there were indicted and tried on sixty-four charges of stock manipulation, stock parking, tax fraud, mail fraud, and wire fraud. The defendants, in addition to Jay Regan, were our head trader, head convertible trader, the CFO and his assistant, and a Drexel Burnham convertible trader. Neither I nor any of the forty or so other partners and employees in the Newport Beach office had any knowledge of the alleged acts in the Princeton office. We were never implicated in, or charged with, any wrongdoing in this or any other matter. Our two offices, more than two thousand miles apart, had very different activities, functions, and corporate cultures.

> He argued that if I were wrong, he would needlessly sacrifice his best investment. I answered that I could not be wrong: I had proven from public records that the trades never happened. He was being sent make-believe trade slips. I made the point that to ignore this could put his job at risk. That clinched it. He closed his accounts with Madoff and got his money back. Over the next eighteen years, he watched other Madoff investors seem to get rich. I wonder how often he regretted hiring me.

> At the last minute I came up with the title “What Every Young Girl Should Know” and refused to tell anyone what I was going to say about it. The room was packed, with attendance beyond anything previously seen. Most agreeably, in addition to the usual mostly male audience, there were lots of pretty coeds. From their questions and their expressions afterward, my listeners weren’t disappointed. I had talked about the solution to the so-called marriage problem and had made the math behind it understandable.… (mais)

Thorp was young professor at UC Irvine when I was a postdoctoral fellow there. During those years, he wrote the brilliant and entertaining "Beat the Dealer", which made me a little money. A few years later, he wrote this book, which also made me some. Unfortunately, the strategy doesn't work very well (depending on arbitrage in expiring warrants and options). Markets have become more efficient over the years, wrecking the profit out of this strategy for ordinary investors. Still, there were great ideas in this book, which were quite revolutionary in its time.… (mais)

I liked when Thorp told his life story - I love memoirs. I liked his writing voice. I looked forward to learning a bit about how he beat the casinos and then the stock market, fully prepared that it would likely be all above my head.

And yeah it was. Thorp was a young prodigy mathematician. He figured out how to win big at blackjack. It involved counting cards, and memorizing strategies for 500 or so possible deals he might be faced with, and betting larger or smaller depending on where he was in the deck.

Then the casinos got wise to him,, made some rule changes about betting, started shuffling the deck on him every other deal, and just plain started cheating, too. He claims it was the cheating that made him give up gambling and turn to investing.

He then devised a hedging approach to investing, which had to do with plotting stock prices an buying certain ones while simultaneously selling them short - I understood this even less than I understood the blackjack, frankly. I tried to get the gist of everything I was reading, but it did go on and on, and I kept wanting more life story.

The book itself felt like it would never end. He gives a chapter of thoroughly boilerplate explanation of the 2008 financial crisis, which sheds absolutely no new light on anything. He gives a chapter of investment advice which likewise fails to shatter the earth. Finally he talks a bit about his own philanthropic outlays - endowing a mathematics chair at UC Irvine, and helping stem cell research. Thorp is still alive, in his 80s.… (mais)