Edward O. Thorp > Quotes

“Life is like reading a novel or running a marathon. It’s not so much about reaching a goal but rather about the journey itself and the experiences along the way”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“In the abstract, life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them. I chose to investigate blackjack. As a result, chance offered me a new set of unexpected opportunities.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“The people who run the casino are tough and smart is so many ways, but they belong in the Dark Ages...They explain the phenomena of their world the way the ancient astrologers did. They really believe that dice get hot.”
― Edward O. Thorp

“Our corporate executives speculate with their shareholders’ assets because they get big personal rewards when they win—and even if they lose, they are often bailed out with public funds by obedient politicians. We privatize profit and socialize risk. The”
― Edward O. Thorp, A Man for All Markets: Beating the Odds, from Las Vegas to Wall Street

“I also learned the value of withholding judgement until I could make a decision based on evidence.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Too bad. Lesson: It doesn’t pay to push the other party to their absolute limit. A small extra gain is generally not worth the substantial risk the deal will break up.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“I wondered how my research into the mathematical theory of a game might change my life. In the abstract, life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them.”
― Edward O. Thorp, A Man for All Markets: Beating the Odds, from Las Vegas to Wall Street

“simple probability and statistics should be taught in grades kindergarten through twelve and that analyzing games of chance such as coin matching, dice, and roulette is one way we can learn enough to think through such issues.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Heller said he had something the rich man could never have. When a puzzled Vonnegut asked what that could be, Heller answered, “The knowledge that I’ve got enough.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“The classic view of the correct price of a common stock is that it is derived from the value of all the future earnings. These earnings are uncertain and subject to unknowable factors. Could anyone have known beforehand how to allow for the impact of 9/11 on the future earnings, hence on the then current market price, of firms headquartered in the Twin Towers of the World Trade Center? These future payoffs are discounted to a present value reflecting their various probabilities and risks.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Focused on Princeton Newport, I lost track of Warren after 1969. Then in 1983, I heard about the remarkable growth of a company called Berkshire Hathaway. Not knowing it was to become Warren’s investment vehicle, I had stopped paying attention to it back in 1969. The stock price then was $42 a share, if you could find anyone to trade with. It was now publicly trading at over $900. I knew at once what this meant. The “cigar butt” had become a humidor of Havanas. Despite its having increased by a multiple of more than 23 in fourteen years, I made my first purchase at $982.50 a share and continued to accumulate stock.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“However, every time we agreed on a deal, the GP insisted on making yet another change in his favor. After we had agreed to some of these, it became apparent that they were endless. I terminated negotiations.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“By this time, Washington’s airports were buried in two feet of snow, so I boarded a train for Boston. During the long ride back I wondered how my research into the mathematical theory of a game might change my life. In the abstract, life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them. I chose to investigate blackjack. As a result, chance offered me a new set of unexpected opportunities.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“This phenomenon has been called the wisdom of crowds. But like most simplifications, this has a flip side, as in the Madoff case. Here there were just two answers, fraudster or investment genius. The crowd voted for investment genius and got it wrong. I call the flip side to the wisdom of crowds the lunacy of lemmings.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Kelly Criterion are: (1) The investor or bettor generally avoids total loss; (2) the bigger the edge, the larger the bet; (3) the smaller the risk, the larger the bet. The Kelly Criterion, not having been invented by the old-line academic economists, has generated considerable controversy.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Overall, US equity investments increased four or five times on average (before taxes, investment adviser fees, and other costs), and Berkshire Hathaway advanced from $12,000 to almost $150,000, fell to $75,000 during the crisis, then rose above $200,000 per share in 2016. When the crisis of 2008 struck, equities lost half their value before rebounding. As tax receipts shriveled, the massive deficits of the US government were echoed at state and local levels. The safety of municipal bonds no longer seemed so assured. However, although they would have done better in equities, they still had enough money and, feeling safe, didn’t worry as they would have done watching the ups and downs in the value of a stock portfolio.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Not all our investors reacted with such aplomb, but every last one of our more than ninety limited partners stood fast. No one asked to withdraw.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“What the hagglers and the traders do reminds me of the behavioral psychology distinction between two extremes on a continuum of types: satisficers and maximizers. When a maximizer goes shopping, looks for a handyman, buys gas, or plans a trip, he searches for the best (maximum) possible deal. Time and effort don’t matter much. Missing the very best deal leads to regret and stress. On the other hand, the satisficer, so-called because he is satisfied with a result that is close to the best, factors in the costs of searching and decision making, as well as the risk of losing a near-optimal opportunity and perhaps never finding anything as good again.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“A trait that showed up at about this time was my tendency not to accept anything I was told until I had checked it for myself.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“This puzzles people, because they expect things to follow what mathematicians call the transitive rule: If A is better than B and B is better than C, then A is better than C. For example, if you replace the phrase better than by any of the phrases longer than, heavier than, older than, more than, or larger than, the rule is true. However, some relationships don’t follow this rule. For instance, is an acquaintance of and is visible to do not. And, if we replace better than by beats on average, these dice don’t follow the transitive rule. So they’re called nontransitive dice. The childhood game of Rock, Paper, Scissors is a simple example of a nontransitive rule. Rock beats (breaks) Scissors, Scissors beats (cuts) Paper, and Paper beats (covers) Rock.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Flights out of Omaha were canceled. With thirty thousand people who had come for the Berkshire weekend missing flights and wanting to leave as soon as possible, it looked as if we would be delayed at least two days. We held a family conference and within an hour Jeff had chartered a private jet for us. The next morning we took a ten-minute ride to the local airport and boarded in minutes—no wait, no lines, no luggage hassle, no TSA body scans and searches. We had two engines, two pilots, a flight attendant, and a good lunch. Seven-year-old Ava spoke for everyone when she declared she never wanted to fly any other way again. Whereas it took ten hours to reach Omaha from Newport Beach, California, including hours of delay in Dallas due to thunderstorms, we got home in two hours.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“Lesson: Do not assume that what investors call momentum, a long streak of either rising or falling prices, will continue unless you can make a sound case that it will.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“The most important reason to wind down the operation was that time was worth more to me than the extra money. Vivian and I wanted to enjoy our children and their families, and to travel, read, and learn. It was time once again to change course in life.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“In its simplest form, investors sell losing stocks before the end of the current year, realizing losses that reduce the year’s income taxes. This behavior contributes to the so-called January effect where selling pressure in December further depresses the stock prices of the year’s losers, followed by a rebound and excessive performance in January.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“But I realized that the odds as the game progressed actually depended on which cards were still left in the deck and that the edge would shift as play continued, sometimes favoring the casino and sometimes the player.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“I also learned from my losing silver investment that when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This is the well-known agency problem in economics, where the interest of the agents or managers don’t coincide with those of the principals, or owners.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“The classic view of the correct price of a common stock is that it is derived from the value of all the future earnings. These earnings are uncertain and subject to unknowable factors. Could anyone have known beforehand how to allow for the impact of 9/11 on the future earnings, hence on the then current market price, of firms headquartered in the Twin Towers of the World Trade Center?”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“The time was right for our project because the necessary high-quality databases and the powerful new computers with which to explore them were just becoming affordable. By luck, one of our researchers almost immediately found the basic idea behind statistical arbitrage.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market

“As part of an orchestrated PR follow-up, a Las Vegas Sun editorial of April 3, 1964, assured us that “Anybody who has been around Nevada very long knows that [casinos welcome] players with a system.” “Edward O. Thorp…obviously doesn’t know the facts of gambling life. There has never been a system invented that overcomes…the advantage the house enjoys in every game of chance.” And for the clincher: “ ‘Dr. Thorp may be qualified at mathematics, but he is sophomoric on gambling,’ is the way Edward A. Olsen, Gaming Control Board chairman, put it.” In a nonconfrontational vein, Gene Evans of Harrah’s Club explained that “…the club believes the player may have a better chance when the deck is shuffled every time, because all the Aces and face cards could come up on each deal.”
― Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market