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The man behind the name, “Fortune’s Formula,” is a living legend: Edward O. In William Poundstone published Fortune’s Formula, a book that took. Author William Poundstone explores how Claude Shannon, the major developer of information theory, affected finance, investing and gambling. These activities. When I reviewed the book Priceless I thought I had reviewed “Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the.

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It sounds so common sense and it’s crazy that modern trading techniques ignore this portfolio insurance, to name another historical example that blew upbut that’s how it is. We use cookies to give you the best possible experience. May be because I just read World Order – Kissinger, books sounds like reading to a 2-year old As I read further I realized how much there was in this book. Poundstone studied physics at MIT and many of his ideas concern the social and financial impact of scientific ideas.

In maths talk — 20 sigma events happen all the time. Oct 08, Ofrmula rated it really liked it Shelves: Open Heart, Open Mind.

A team that had to play a number of games in a row did poorer on average than a team given more rest between games. It turns out that a random walk is not terribly different from a compressed signal in noise, at least from a mathematical point of view. Thorp and a mob-connected guy fly to Nevada to test out his system, or when he and Claude Shannon try to build a device for winning at roulette, or how a parking lot company also mob-connected became Time Warner.


Thorp was already running a hedge fund and making incredible returns by this time. Mostly this book is good and in parts it’s great. Jul 19, Anthoney rated it it was amazing. Close Report a review At Kobo, we try to ensure that published reviews do not contain rude or profane language, spoilers, or any of our reviewer’s personal information.

Poundstone comes across as the best college professor you ever hand, someone who can turn almost any technical topic into an entertaining and zesty lecture. And the LTCM story — always entertaining no matter how many times I read it — is told again, though this time with the lesson that the Kelly criterion doesn’t go so well with leverage.

Generally, in betting situations, the person with the edge is either the house or the stockbroker. That book still influences the way that I make decisions.

Quotes from Fortune’s Formula Apr 22, Jacob rated it liked it Shelves: Thorp took the “Kelly formula” to Las Vegas. Claude Shannon gets significant coverage, although his direct contribution to finance is somewhat unclear; coverage of Ed Thorp is totally appropriate and his story is inherently interesting.

Interesting history tying together Claude Shannon, information theory, organized crime, probability, investment theory, and the early history of hedge funds.

Fortune’s Formula traces how the Kelly formula sparked pounsstone even as it made fortunes at racetracks, casinos, and trading desks. Many chapters flash by without any link to the Kelly Criterion itself. I did not pick up on enough science to fortuhe useful for my own i Some interesting stories revolving around the science of information, investments sometimes using this science and sometimes notand the law revolving around RICO. Apr 09, Matt Austin rated it it was amazing.


Inside the Doomsday Machine. All the Devils Are Here. Instead I played poker, but that, as they say, is another story.

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The fund is expected to compound exponentially in inflation-adjusted dollars. Intwo Bell Labs scientists discovered the scientific formula for getting rich. Anyway, this Kelly bet is the thread that very loosely runs through poundstome wide-ranging and fascinating stories in this book. Poundsotne 27, Tiago Fragoso rated it liked it. While this book has its ups and downs, the majority of the book is extremely interesting.

Quite a timely read, given the current financial disarray, this traces the history of the Kelly criterion from Bell Labs where John Kelly, Jr.

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I really enjoyed this book. Continue shopping Checkout Continue shopping. Thorp and his partner, working on different coasts, transformed the financial industry.