#604: Master Investor Ed Thorp on How to Think for Yourself, Mental Models for the Second Half of Life, How to Be Inner-Directed, How Basic Numeracy Is a Superpower, and The Dangers of Investing Fads

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Edward O. Thorp (@edwardothorp) is the
author of the bestseller Beat the Dealer, which transformed
the game of blackjack. His subsequent book, Beat the Market,
coauthored with Sheen T. Kassouf, influenced securities markets
around the globe. He is also the author of A Man for
All Markets: From Las Vegas to Wall Street, How I Beat the Dealer
and the Market.


Edward was one of the world’s best blackjack players and
investors, and his hedge funds were profitable every year for 29
years. He lives in Newport Beach, California.


You can find our first conversation here.


Please enjoy!


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[06:39] The value of long-term thinking and the price of
short-term thinking


[07:57] What is a common stock warrant?


[09:52] Why are people generally poor at taking longer term (or
alternative) perspectives?


[11:08] Conversing about numeracy and common misunderstandings


[15:00] How to become more numeracy literate


[20:18] It’s Raining Man


[22:31] The Rule of 72


[26:14] Making the best financial decisions with unknown
variables


[35:57] How to have fun learning about probability and statistics


[37:47] How to get an edge in hedge fund investing (with book
recommendations)


[46:23] Ed’s methods for losing (or maintaining) weight and
looking 60 in spite of being almost 90 years old


[53:38] Favorite beer


[55:03] Music as stress reduction


[56:02] Avoiding unnecessary risks


[1:04:12] The age-guessing experiment


[1:06:17] Other-directed vs. inner-directed and takeaways from
The Lonely Crowd by David Riesman


[1:14:35] How an 89-year-old maintains hair growth


[1:17:20] Using scrap time


[1:19:45] A big change in Ed’s later life that increased its
quality


[1:22:16] New reflections, future hopes, and parting thoughts


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