Ed Thorp & Over-betting

  |  March 22   |  3 Comments

In today’s Wall Street Journal, there’s a great interview with Edward Thorp and Bill Gross.

Both investors are asked about current market conditions and their thoughts on investing in general.

Ed Thorp is a hedge fund manager who ran Princton-Newport Partners and has returns of 20% over a 28-year period (ending 1998). In addition to his investing skills, Thorp is best known for his work at the Blackjack tables. In 1962, he authored the book Beat the Dealer, which explained the methods he used to win at Blackjack.

For more information on Ed Thorp, check out the book Fortune\’s Formula. It’s a great read that details the evolution of information theory, the Kelly Criterion, gambling strategies, hedge funds, and the mob’s involvement in all of the above. Math, gambling, the mafia, and investing. Who could ask for anything more? Also, if you’re interested in Thorp’s Blackjack strategies (card counting), the book Bringing Down the House is another great read. But I’ll stick to the subject of investing for this post.

Over-betting

Below is a section from the WSJ article where Gross and Thorp discuss hedge funds:

Continue reading… »



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