Ed Thorp has a skeptical mind. That’s what got him to question the belief that you couldn’t beat the casino. That same skepticism eventually drove him to question financial markets. During an interview, Thorp explained that journey and what he learned.
The big difference between gambling and investing is in the probabilities. Most gambling games have fixed probabilities. Precise accuracy is possible.
In the game of blackjack, if you know the number of decks, then you know how many of each card exists (assuming the House plays fair), and you can work out the odds from there.
Not so with investing. The complexity of markets, the number of factors involved, make precision impossible. Here’s Thorp: Continue Reading…