Quote for the Week
That gets me to the point about the relationship between gambling and investing, that is, what you learn from one helps with the other. Gambling games are, for the most part, an area where you can calculate the odds, the probabilities, in detail and get them rather exact. There are some exceptions, like sports betting and so forth, that are more like social or financial markets. But you can actually come into a gambling game with known probabilities and get answers. You have the advantage, like you have in the physical sciences, of so-called repeatable experiments. You can simulate a gambling game a million times if you want because you know the probabilities. It’s much more difficult in the securities markets because we just have one history from which we have to infer what’s going on, and the probabilities that we have are not exact—they’re just estimates. We’re in a world that’s controlled by people, which evolves in complex ways that we don’t fully understand. So you don’t have the same simple rules you have in the physical sciences and in the calculations that are behind gambling games. Nonetheless, the things you learn about gambling games carry over, in large part, to the investment world. — Ed Thorp (source)
From the Archives
Last Call
- America’s First Bubble – Owenomics
- Dividend Investing is Dead – Flyover Stocks
- Largest American Companies 1994-2025 – ABHC
- Why I Object to ‘Hitting a Number’ for Retirement – C. Benz
- The Oldest Trick: A Genealogy of Engineered Dependence – MFO
- A Fundamental Flaw of Prediction Markets – Klement on Investing
- Decision Fatigue: Why You Feel Exhausted Without Having “Done” Anything Physically – Facile Things
- I Love My Things… – Lonely Money
- The Decline of Deviance 2 – Experimental History
- Has America Crossed the Asshole Threshold? – The Grim Historian