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Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street By William Poundstone,

  • Title: Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street
  • Author: William Poundstone
  • ISBN: 9780809045990
  • Page: 373
  • Format: Paperback
  • In 1956 two Bell Labs scientists discovered the scientific formula for getting rich One was mathematician Claude Shannon, neurotic father of our digital age, whose genius is ranked with Einstein s The other was John L Kelly Jr a Texas born, gun toting physicist Together they applied the science of information theory the basis of computers and the Internet to the probIn 1956 two Bell Labs scientists discovered the scientific formula for getting rich One was mathematician Claude Shannon, neurotic father of our digital age, whose genius is ranked with Einstein s The other was John L Kelly Jr a Texas born, gun toting physicist Together they applied the science of information theory the basis of computers and the Internet to the problem of making as much money as possible, as fast as possible.Shannon and MIT mathematician Edward O Thorp took the Kelly formula to Las Vegas It worked They realized that there was even money to be made in the stock market Thorp used the Kelly system with his phenomenonally successful hedge fund, Princeton Newport Partners Shannon became a successful investor, too, topping even Warren Buffett s rate of return Fortune s Formula traces how the Kelly formula sparked controversy even as it made fortunes at racetracks, casinos, and trading desks It reveals the dark side of this alluring scheme, which is founded on exploiting an insider s edge.Shannon believed it was possible for a smart investor to beat the market and Fortune s Formula will convince you that he was right.
    Fortune s Formula The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street In two Bell Labs scientists discovered the scientific formula for getting rich One was mathematician Claude Shannon neurotic father of our digital age whose genius is ranked with Einstein s The

    One thought on “Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street”

    1. An engaging multi biography history of the repeatedly reinvented Kelly criterion, mixed in with overviews of Claude Shannon, John Larry Kelly, Jr Ed Thorp, and their famous gambling adventures in beating blackjack and roulette and, as some of the first quants , the stock market Like Thompson sampling, the Kelly criterion has been reinvented many times Poundstone lists at least 4 inventors Kelly, Leo Breiman, Bernoulli, and Henry Latan Poundstone starts with the early mob and the numbers racket a [...]

    2. This is a very interesting book and one that explains complicated mathematical and economic ideas beautifully and simply It is a story that involves gangsters, mathematicians, the founder of information theory, gangsters and politicians and police both corrupt and, well, even corrupt The formula to make a fortune is essentially this if you are going to bet you need to be sure you have some sort of edge not necessarily a sure thing , but an edge , in this book the gamblers generally count cards [...]

    3. 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.The title and subtitle are pretty overblown and don t really indicate what the book is about The fortune s forumula referred to in the title is pretty dang interesting though the Kelly criteria, which is the optimal percentage that should be wagered given the odds.I didn t realize that there even was a optimal bet, but it turns out that overbetting is actually worse than un [...]

    4. Interesting history tying together Claude Shannon, information theory, organized crime, probability, investment theory, and the early history of hedge funds In general I found it interesting but too glib for its own good The title is misleading, there isn t a single scientific betting system that beat the casinos and Wall Street 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 ba [...]

    5. After enjoying Poundstone sGaming the Vote, I picked this up from the local library Quite a timely read, given the current financial disarray, this traces the history of the Kelly criterion from Bell Labs where John Kelly, Jr worked in the 50 s and 60 s , to Ed Thorp s application of it in his classicBeat the Dealer, to Wall Street in recent decades.I feel I came away with a better understanding of the hedge fund junk bond scandals of the 80 s and 90 s, as well as an appreciation of the economic [...]

    6. O livro come a meio superficial com umas historinhas de teoria da informa o e tal, mas no meio, quando come a a falar do mercado financeiro imposs vel de largar A hist ria super bem contada e, mesmo para um super noob de finan as como eu, ultra interessante Imagino que o leitor com algum conhecimento vai pirar mais ainda.

    7. I really enjoyed this book Who knew that MIT, Vegas Casinos, mobsters, and Wall Street all had so much in common The stories in this book are fascinating However, the most useful part of the book is the explanation of the relationship between information theory and betting investing I wish I had read this book 10 years ago.

    8. Excellent The Idea Factory Bell Labs led me to this book Blends Mafia stories, Bell Lab star s anecdotes, gambling, a compelling betting and investment strategy via Kelly criterion and Wall Street greed stories.

    9. The nerd in me expected discussion of how why the Kelly criterion formula works More of a history book than a math gambling book.

    10. This book is a bit of an odd combination of history biography like The Idea Factory Bell Labs and the Great Age of American Innovation or One Summer America, 1927 and finance gambling Fortunately, the long rambles about various people involved in the ideas covered by this book are diverting It s just not as cohesive as I would prefer Claude Shannon gets significant coverage, although his direct contribution to finance is somewhat unclear coverage of Ed Thorp is totally appropriate and his story [...]

    11. Fortune s Formula by William Poundstone pp 400 Utterly fascinating Gambling, mobsters, mathematicians, economists, hedge funds, greed, and how it s linked together by some early genius and freak timing Part history lesson, part text book, part novel, all true, it flows beautifully For anyone who is interested in math, the financial markets, or Las Vegas, this book is a fun read.Poundstone tells the story of how one formula changed the way casinos look at card counters, how a mathematical concept [...]

    12. I love books like this.It s non fictional account of a few people who were behind fortune s formula This formula tells you how much of your total net worth to invest in any particular investment All you have to do is figure out the expected payout of the investment based on information you have.Does it work Yes, if you have accurate data.The investments have to have an expected payoff of greater than 0 meaning you will make some money on average even though there is some chance of losing money S [...]

    13. In 2015 I read Gertner s The Idea Factory Bell Labs and the Great Age of American Innovation a fascinating look at ATT s RD department Fortune s Formula expands upon Shannon s contribution to gambling and Wall Street Shannon took his coworker John Kelly s formula Gmax R The Kelly Criteria to Vegas with Edward Thorp to stack the odds against casinos and win blackjack games hand over fist Thorp eventually published his own book Beat the Dealer A Winning Strategy for the Game of Twenty One.Poundsto [...]

    14. I started and quit this book a while back I picked it up again after reading Trading Bases because I remembered that it offered an explanation of the Kelly betting strategy I think the reason that I didn t like it the first time was twofold 1 The Kelly criterion seemed over simplified and maybe even wrong and 2 I had nothing to apply it to at the time Now that I understand it, and have active interests in investing and possibly building a betting model for baseball , it is alluring The book co [...]

    15. Gangsters, gamblers, mathematicians, touts, hedge fund wizards, and Fortune s Formula is the Kelly Criterion from J.L Kelly Jr who was a mathematician at Bell Labs in the 1950s Essentially the formula gives the optimal size of bets in order to win as much as possible over time while reducing the risk of ruin The thing for the reader to realize is that the Kelly Criterion has no utility unless the bettor or investor has an advantage That needs to be repeated on an even bet, such as tossing a coi [...]

    16. I really enjoyed reading Fortune s Formula Poundstone as the amazing ability to simplify complexity while keeping the reader engaged.With that said, I wish Poundstone had gone into detail explaining how the Kelly Criterion works in games or investments with than 2 possible outcomes Instead, he just informs us that there are people out there using this formula for such scenarios such as horse racing, investing, etc Most importantly, I like that Fortune s Formula caused me to go and find article [...]

    17. Mostly this book is good and in parts it s great The great parts are around the biographical sections relating to Shannon and the use of the Kelly formula in famous financial investment firm collapses successes.Where the real value of this book lies is its extended discussion on what risk is and how you can go about handling it in your own investments and life It s for this I d recommend it to anyone The Kelly formula is less about mathematics and mostly about dealing with risk in an optimal way [...]

    18. William Poundstone is rapidly becoming one of my favorite authors It amazes me how deep he gets into a variety of topics 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 This is of an enjoyment read for me, but it correlates tightly with the Random Walk Guide In my view, that reinforces the views expressed in the Random Walk Guide a good thing as far as I m concerned.

    19. While this book has its ups and downs, the majority of the book is extremely interesting Despite hearing much about Ed Thorp and the start of quants, I never knew of the Kelly criterion and Claude Shannon including information theory Mr Poundstone does a great job interweaving different stories with plethora of characters to present the reader with a great comprehensive record of Fortune s Formula I highly recommend this book Not just for investors, but also for any curious mind.

    20. An interesting side to the genius of Claude Shannon An enjoyable read, but I would have liked to have seen of the maths Now I have to read Kelly s paper If you have an interest in the stock market or other forms of gambling then you will find this an interesting read The message here is well known to traders money management is king.

    21. Betting system that beat casinos and Wall Street Central theme is the Kelly Criterion Brings in information theory, mentions Shannon and Tom Cover a lot Very interesting, but drawn out as usual More interesting as a history than anything else Also includes some early organized crime betting history as well.

    22. I didn t like this book at first, due to its simplistic writing style May be because I just read World Order Kissinger, books sounds like reading to a 2 year old As I read further I realized how much there was in this book It thoroughly documents the Kelly Criterion and shows how quantitative finance as a discipline has evolved This book helped remind me of that interest.

    23. Very fun and entertaining book covering a range of topics The underlying theme is the Kelly Criterion, but it ranges from everything from Mobsters, stock market hedge funds, Hong Kong horse races, Rudy Guliani, and everything in between The authors many tangents are fascinating Very enjoyable read.

    24. 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.Poundstone is an excellent writer, but I found myself wanting a little in the way of technical detail But that is less a criticism of him and revealing of my tastes.

    25. I liked aspects of this book I was barely aware of Shannon, so I really like the introduction to his theories The story is incredible overall, but I found the stock market stuff the second half, roughly less interesting and less understandable to me With that said, I would recommend this book to people who are nerdy in certain ways.

    26. I really like poundstone as a writer And Thorp and Shannon are fascinating characters The parts that deal with them scamming casinos is great.The general finance parts grabbed me less That could just be my interests though If you like Michael Lewis books this one is definitely worth a read.

    27. This book not only makes the connections between information theory, gambling, and the stock market, it does so in way that s interesting and provides a fantastic view of the personalities involved Highly recommend it.

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