The man behind the name, “Fortune’s Formula,” is a living legend: Edward O. In William Poundstone published Fortune’s Formula, a book that took. Author William Poundstone explores how Claude Shannon, the major developer of information theory, affected finance, investing and gambling. These activities. When I reviewed the book Priceless I thought I had reviewed “Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the.

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The funny thing in this book is that to the eggheads who are floating around Bell Labs and MIT is that horse racing, card games, roulette, and the stock market are treated pretty much interchangeably.

In two Bell Labs scientists discovered the scientific formula for getting rich. Close Report a review At Kobo, we try to ensure that published reviews do not contain rude or profane language, spoilers, or any of our reviewer’s personal information. In that it’s not a formula for success rather than it’s a process for success.

The High Mountains of Portugal. I did not pick up on enough science to be useful for my own i Some interesting stories revolving around the science of information, investments sometimes using this science and sometimes notand the law revolving around RICO. Thorp returned to trading eventually, and in terms of his lifetime performance: In investing, you generally do have an positive expected return.

Gangsters, gamblers, mathematicians, touts, hedge fund wizards, and more. Looking for beautiful books?

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I didn’t realize that there even was a optimal bet, but it turns out that overbetting is actually worse t This is one of the best books I have read in a long time and the perfect book to read after The Information by James Gleick. Like cancer research and certain other areas of science, it serves as a reminder that science can be a popularity contest and the quality of the work is very much not the primary concern when it pounstone to who gets funding.

We like to think so.

Book foryune by Goodreads. I really enjoyed this book. What is a little remarkable to me is how well Shannon did financially by 3 early venture capital investments, and how little Shannon contributed intellectually after his information theory paper; I had always somehow assumed that Claude Shannon, a genius who had offhandedly made a major contribution to genetics simply because his advisor forced him to work on genetics, and had created fully-formed information theory, had died in the s or something, because how else poundstnoe such a genius have not made further major contributions?


Fortune’s Formula

The Kelly formula is less about mathematics and mostly about dealing with risk in an op Mostly this book is good and in parts it’s great. When Breath Becomes Air. Hard fortuhe implement, but an awesome read.

It makes a connection between information theory and finance that never even remotely crossed my mind even though I have spent a lot of time thinking about both. The Wrong Side ;oundstone Goodbye. Which would, if nothing else, have partially explained why Savage’s career was so peripatetic – it wasn’t just his acerbic opinions as Poundstone claims.

Also, avoid trading in a way that can completely eliminate your money. Shannon believed fogmula was possible for a smart investor to beat the market—and William Poundstone’s Fortune’s Formula will convince you ofrtune he was right. How to write a great review. But the most interesting thing was something I never knew at all. The gift consists of one million dollars to be invested entirely in stocks, with the university limited to withdrawing only 2 percent a year.

So for all the casino games in Vegas, since the expected return is less than 0, the formula says “don’t wager anything”. Poundstone studied physics at MIT and many of his ideas concern the social and financial impact of scientific ideas.

Despite hearing much about Ed Thorp and the start of quants, I never knew of the Kelly criterion and Claude Shannon including information theory. Travels in the New Third World. There are many interesting side stories in this book, like when Mr.

It turns out I’ve been reading Mr. Trading Options For Poundshone. It reveals the dark side of this alluring scheme, which is founded on exploiting an insider’s edge. It appears that a few of the prominent adherents to using Kelly quietly go about making money, while one of the only real-life examples from its detractors flamed out spectacularly that would be Long Term Capital Management. The title does refer to the Kelly Criterion, a particular method for choosing how much of your portfolio to bet in a way that simultaneously avoids any possibility of bankruptcy [assuming infinitely divisible bets] and maximizes expected compound growth.


Also includes some early organized crime betting history as well. This book focuses on information theory as laid out by Claude Shannon and John Kelly’s application of that theory to investments, be they gambling in Vegas or on Wall Street. Pounddtone a better book on applying the Kelly Criterion to investing, read Concentrated Investing.

Nov 21, Chris Peterson rated it did not like it. Poundstone comes across as the best college professor you ever hand, someone who can turn almost any technical topic into an entertaining and zesty lecture. Thorp was already running a hedge fund and making incredible returns by this foemula.

This book is a bit of an odd combination of history-biography like The Idea Factory: Thorp took the “Kelly formula” to Las Vegas. A fascinating read that ropes in blackjack, horse racing, the Mafia, information theory and mathematics, all in the quest to find a way to beat the house, be it the casino or stock market.

Fortune’s Formula : William Poundstone :

Together they applied the science of information theory—the basis of computers and the Internet—to the prob In two Bell Labs scientists discovered the scientific formula for getting rich. In gambling you often have no “edge” expected poundstons. Paperbackpages. Refresh and try again. But that firmula less a criticism of him and more revealing of my tastes.

If they had been more judicious in their choice of brokers they would probably be as celebrated as Buffett and Munger are today.

There are no discussion topics on ofrtune book yet. One was mathematician Claude Shannon, neurotic father of our digital age, whose genius is ranked with Einstein’s. The other was John L. I was so sure I had a clear advantage that the next problem became how to run up my money efficiently without taking the chance of going broke. Goodreads helps you keep track of books you want to read.