Legendary Trader Edward O. Thorp on Beating the Stock Market and Blackjack

Brought to you by Wealthfront automated investing https://wealthfront.com/tim AG1 all-in-one nutritional supplement https://drinkag1.com/tim and Eight Sleep’s Pod Pro Cover sleeping solution for dynamic cooling and heating https://eightsleep.com/Tim Show notes: https://tim.blog/2022/05/24/ed-thorp/ 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 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! 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/ 00:00 Start 00:00:57 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. 00:08:57 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? 00:12:27 What method did Edward and Claude devise to beat roulette with the assistance of what MIT considers to be the first wearable computer? 00:14:43 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? 00:23:39 How did finance and investing enter the picture for Edward? Where did this lead, and who did he meet along the way? 00:34:00 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? 00:37:09 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? 00:42:40 What lessons learned from investing are transferable to other areas of life? 00:45:06 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? 00:50:43 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? 00:59:46 Exploring the mental models of externalities, the tragedy of the commons, and fundamental attribution errors. 01:10:07 What you should be reading and listening to if you want to enact positive change in the world right now — politically or evolutionarily. 01:15:33 What investors, aside from Warren Buffett, impress Edward — and why? 01:20:01 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? 01:25:33 What does independence mean to Edward and how did he spend his time after winding down the investment side of things? 01:27:12 Is there anything Edward is particularly curious about learning right now? 01:29:38 Pondering a conversation between Joseph Heller and Kurt Vonnegut and other parting thoughts.

Tim FerrisshostEdward O. Thorpguest

May 25, 20221h 33mWatch on YouTube ↗

EPISODE INFO

Released: May 25, 2022
Duration: 1h 33m
Channel: Tim Ferriss
Watch on YouTube: ▶ Open ↗

EPISODE DESCRIPTION

Brought to you by Wealthfront automated investing https://wealthfront.com/tim AG1 all-in-one nutritional supplement https://drinkag1.com/tim and Eight Sleep’s Pod Pro Cover sleeping solution for dynamic cooling and heating https://eightsleep.com/Tim Show notes: https://tim.blog/2022/05/24/ed-thorp/ 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 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! 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/ 00:00 Start 00:00:57 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. 00:08:57 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? 00:12:27 What method did Edward and Claude devise to beat roulette with the assistance of what MIT considers to be the first wearable computer? 00:14:43 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? 00:23:39 How did finance and investing enter the picture for Edward? Where did this lead, and who did he meet along the way? 00:34:00 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? 00:37:09 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? 00:42:40 What lessons learned from investing are transferable to other areas of life? 00:45:06 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? 00:50:43 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? 00:59:46 Exploring the mental models of externalities, the tragedy of the commons, and fundamental attribution errors. 01:10:07 What you should be reading and listening to if you want to enact positive change in the world right now — politically or evolutionarily. 01:15:33 What investors, aside from Warren Buffett, impress Edward — and why? 01:20:01 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? 01:25:33 What does independence mean to Edward and how did he spend his time after winding down the investment side of things? 01:27:12 Is there anything Edward is particularly curious about learning right now? 01:29:38 Pondering a conversation between Joseph Heller and Kurt Vonnegut and other parting thoughts.

SPEAKERS

Tim Ferriss
host
Author and podcaster, host of The Tim Ferriss Show.
Edward O. Thorp
guest
Mathematician and legendary quantitative investor known for beating blackjack and pioneering quantitative finance approaches.

EPISODE SUMMARY

In this episode of Tim Ferriss, featuring Tim Ferriss and Edward O. Thorp, Legendary Trader Edward O. Thorp on Beating the Stock Market and Blackjack explores edward Thorp on probability, risk, and the discipline of “enough” Edward O. Thorp recounts how his math background led him from testing blackjack strategies in Las Vegas to publishing work that created a sensation and later writing Beat the Dealer.

RELATED EPISODES