#596: Edward O. Thorp, A Man For All Markets — Beating Blackjack and Roulette, Beating the Stock Market, Spotting Bernie Madoff Early, and Knowing When Enough is Enough

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Edward O. Thorp 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.


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*


Edward fills us in on where he grew up, how he was educated, what
made the application of mathematics to gambling such a compelling
challenge, and why he rushed to publish his successful system
after testing it in the real world. [04:51]


What reference material did Edward use in his first trip to the
blackjack table in Vegas, and why was Claude Shannon at MIT — a
person known to be difficult to reach — willing to spare five
minutes to meet with him around this time? [12:01]


What method did Edward and Claude devise to beat roulette with
the assistance of what MIT considers to be the first wearable
computer? [15:11]


Edward looks great for a man in his 60s — which is especially
incredible when you consider he’s 89! Is it just a case of lucky
genetics, or does he follow some kind of mortality-cheating
health regimen? Has his approach to remaining in shape changed
over the years? [17:13]


How did finance and investing enter the picture for Edward? Where
did this lead, and who did he meet along the way? [25:19]


What was it about Warren Buffett that made Edward come away from
their first meeting convinced he’d someday be the richest man in
the world? [34:22]


If Edward were teaching a seminar in investing to a modern
student body (some of whom might not possess an aptitude for
math), what frameworks would he impart to get them started?
[38:55]


What lessons learned from investing are transferable to other
areas of life? [43:50]


Even at 89, Edward considers himself a long-term thinker. How
might those of us who struggle to think beyond the short-term be
more like Edward? [45:59]


How did Edward suss out that something was fishy about the way
the Madoff brothers were doing business 17 years before everybody
else finally caught on? [50:58]


Exploring the mental models of externalities, the tragedy of the
commons, and fundamental attribution errors. [59:15]


What you should be reading and listening to if you want to enact
positive change in the world right now — politically or
evolutionarily. [1:08:29]


What investors, aside from Warren Buffett, impress Edward — and
why? [1:13:48]


How has Edward known where to draw the line between growing a
business and withdrawing before it consumed all else in his life?
What catalyzed his decision to wind things down? [1:17:48]


What does independence mean to Edward and how did he spend his
time after winding down the investment side of things? [1:22:52]


Is there anything Edward’s particularly curious about learning
right now? [1:24:27]


Pondering a conversation between Joseph Heller and Kurt Vonnegut
and other parting thoughts. [1:26:37]


*


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