Ed Thorp on How to Think for Yourself, How to Be Inner-Directed, and The Dangers of Investing Fads

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 | Brought to you by Wealthfront automated investing (http://wealthfront.com/tim), Vuori comfortable and durable performance apparel (https://vuoriclothing.com/tim), and Eight Sleep’s Pod Pro Cover sleeping solution for dynamic cooling and heating (http://eightsleep.com/Tim). More on all three below. 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. Please enjoy! Show notes: https://tim.blog/2022/06/28/edward-o-thorp-2/ 00:00 Start 00:00:15 The value of long-term thinking and the price of short-term thinking 00:01:33 What is a common stock warrant? 00:03:33 Why are people generally poor at taking longer-term (or alternative) perspectives? 00:04:53 Conversing about numeracy and common misunderstandings 00:08:56 How to become more numeracy literate 00:14:42 It’s Raining Man 00:17:03 The Rule of 72 00:21:03 Making the best financial decisions with unknown variables 00:29:14 How to have fun learning about probability and statistics 00:31:05 How to get an edge in hedge fund investing (with book recommendations) 00:40:18 Ed’s methods for losing (or maintaining) weight and looking 60 in spite of being almost 90 years old 00:48:06 Favorite beer 00:49:30 Music as stress reduction 00:50:24 Avoiding unnecessary risks 00:59:41 The age-guessing experiment 01:01:53 Other-directed vs. inner-directed and takeaways from The Lonely Crowd by David Riesman 01:10:44 How an 89-year-old maintains hair growth 01:13:47 Using scrap time 01:16:26 A big change in Ed’s later life that increased its quality 01:19:13 New reflections, future hopes, and parting thoughts About Tim Ferriss: Tim Ferriss is one of Fast Company’s “Most Innovative Business People” and an early-stage tech investor/advisor in Uber, Facebook, Twitter, Shopify, Duolingo, Alibaba, and 50+ other companies. He is also the author of five #1 New York Times and Wall Street Journal bestsellers: The 4-Hour Workweek, The 4-Hour Body, The 4-Hour Chef, Tools of Titans and Tribe of Mentors. The Observer and other media have named him “the Oprah of audio” due to the influence of his podcast, The Tim Ferriss Show, which has exceeded 500 million downloads and been selected for “Best of Apple Podcasts” three years running. Connect with Tim Ferriss: Sign up for "5-Bullet Friday" (Tim's free weekly email newsletter): https://go.tim.blog/5-bullet-friday-yt/ Visit the Tim Ferriss PODCAST: https://tim.blog/podcast/ Visit the Tim Ferriss BLOG: https://tim.blog/ Follow Tim Ferriss on TWITTER: https://twitter.com/tferriss/ Follow Tim Ferriss on INSTAGRAM: https://www.instagram.com/timferriss/ Like Tim Ferriss on FACEBOOK: https://www.facebook.com/TimFerriss/

Tim FerrisshostEd Thorpguest

Jun 28, 20221h 24mWatch on YouTube ↗

EPISODE INFO

Released: June 28, 2022
Duration: 1h 24m
Channel: Tim Ferriss
Watch on YouTube: ▶ Open ↗

EPISODE DESCRIPTION

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 | Brought to you by Wealthfront automated investing (http://wealthfront.com/tim), Vuori comfortable and durable performance apparel (https://vuoriclothing.com/tim), and Eight Sleep’s Pod Pro Cover sleeping solution for dynamic cooling and heating (http://eightsleep.com/Tim). More on all three below. 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. Please enjoy! Show notes: https://tim.blog/2022/06/28/edward-o-thorp-2/ 00:00 Start 00:00:15 The value of long-term thinking and the price of short-term thinking 00:01:33 What is a common stock warrant? 00:03:33 Why are people generally poor at taking longer-term (or alternative) perspectives? 00:04:53 Conversing about numeracy and common misunderstandings 00:08:56 How to become more numeracy literate 00:14:42 It’s Raining Man 00:17:03 The Rule of 72 00:21:03 Making the best financial decisions with unknown variables 00:29:14 How to have fun learning about probability and statistics 00:31:05 How to get an edge in hedge fund investing (with book recommendations) 00:40:18 Ed’s methods for losing (or maintaining) weight and looking 60 in spite of being almost 90 years old 00:48:06 Favorite beer 00:49:30 Music as stress reduction 00:50:24 Avoiding unnecessary risks 00:59:41 The age-guessing experiment 01:01:53 Other-directed vs. inner-directed and takeaways from The Lonely Crowd by David Riesman 01:10:44 How an 89-year-old maintains hair growth 01:13:47 Using scrap time 01:16:26 A big change in Ed’s later life that increased its quality 01:19:13 New reflections, future hopes, and parting thoughts About Tim Ferriss: Tim Ferriss is one of Fast Company’s “Most Innovative Business People” and an early-stage tech investor/advisor in Uber, Facebook, Twitter, Shopify, Duolingo, Alibaba, and 50+ other companies. He is also the author of five #1 New York Times and Wall Street Journal bestsellers: The 4-Hour Workweek, The 4-Hour Body, The 4-Hour Chef, Tools of Titans and Tribe of Mentors. The Observer and other media have named him “the Oprah of audio” due to the influence of his podcast, The Tim Ferriss Show, which has exceeded 500 million downloads and been selected for “Best of Apple Podcasts” three years running. Connect with Tim Ferriss: Sign up for "5-Bullet Friday" (Tim's free weekly email newsletter): https://go.tim.blog/5-bullet-friday-yt/ Visit the Tim Ferriss PODCAST: https://tim.blog/podcast/ Visit the Tim Ferriss BLOG: https://tim.blog/ Follow Tim Ferriss on TWITTER: https://twitter.com/tferriss/ Follow Tim Ferriss on INSTAGRAM: https://www.instagram.com/timferriss/ Like Tim Ferriss on FACEBOOK: https://www.facebook.com/TimFerriss/

SPEAKERS

Tim Ferriss
host
Author and podcast host of The Tim Ferriss Show, interviewing top performers across business, investing, and health.
Ed Thorp
guest
Mathematician and pioneering quantitative investor known for blackjack probability work and hedge fund investing.

EPISODE SUMMARY

In this episode of Tim Ferriss, featuring Tim Ferriss and Ed Thorp, Ed Thorp on How to Think for Yourself, How to Be Inner-Directed, and The Dangers of Investing Fads explores ed Thorp on numeracy, long-term thinking, and resisting investing fads Ed Thorp explains how mispricings can arise when investors misunderstand time-sensitive securities like common stock warrants and fail to adjust for approaching expiration.

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