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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That needs to be repeated: Dec 27, Tiago Fragoso rated it liked it.

Fortune’s Formula : William Poundstone :

Formila am definitely planning on reading his other books now. In fact, he invented card counting and used an early IBM mainframe to analyze blackjack and prove that card counting could be used to change the odds of the game in favor of the player instead of the house. 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. It comes down on the pro-Kelly side, but the arguments it makes are not especially convincing.

I’ve also read his excellent book on game theory called Prisoners Dilemma. Sep 03, Andy rated it really liked it Shelves: Goodreads helps you keep track of books you want to read. It appears that a few of the prominent adherents to using Kelly quietly go about for,ula money, while one of the only real-life examples from its detractors flamed out spectacularly that would be Long Term Capital Management. When the efficient market hypothesis was influencing the field of finance, Mr.

Thorp and his partner, working on different coasts, transformed the financial industry. 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. This is more of an enjoyment read for me, but it correlates tightly with the Random Walk Guide.

This book is a bit of an odd combination of history-biography like The Idea Factory: 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. Jan 02, Elizabeth rated it it was amazing Shelves: 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.


Fromula, Wash Your Face. In fact, Thorp was able to work out the Black Scholes Merton formula for pricing options which led to the Nobel prize, by the way long before their paper was published. Check out the top books of the year on our page Best Books of Paperbackpages. Brings in information theory, mentions Shannon and Tom Cover a lot.

This is a very interesting book and one that explains complicated mathematical and economic ideas beautifully and simply. I did not pick up on enough science to be useful for my own investing and gambling, but this book does give you fomula basics on how it can be applied, and whets the appetite for learning more.

With that said, I would recommend this book to people who are nerdy in certain ways. It’s non fictional account of a few people who were behind “fortune’s formula”. To ask other readers questions about Fortune’s Formulaplease sign up.

For example, they won’t let you play only a few hands of blackjack near the end of each deck. Shannon is known as the father of information theory and in many respects as the founder of the digital world we live in today. To see what fortuns friends thought of this book, please sign up. Continue shopping Checkout Continue shopping. Because, were there any hundred-dollar bills, someone would already have picked them up.

The Road to Ruin. Poundstone as the amazing ability to simplify complexity while keeping the reader engaged. When I got to Vegas and saw the Vegas line it was clear that their betting lines did indeed consider recency. I liked aspects of this book – I was barely aware of Shannon, so I really like the introduction to his theories. 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 fprmula much not the primary concern when it comes to who gets funding.


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 notpoundstne the law revolving around RICO.

Open Heart, Open Mind. 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. In one amusing anecdote, Black-Scholes used their pricing model to spot a particularly mispriced warrant; then the company changed the terms of the warrants, wiping out the warrant holders and Black-Scholes, in a way that insiders had known was coming and sold all their warrants.

Once slight disappointment is when Claude Shannon’s investment portfolio is revealed. They realized that there was even more money to be made in the stock market.

Fortune’s Formula traces how the Kelly formula sparked controversy even as it made fortunes at racetracks, casinos, and trading desks.

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The problem is a form of selection bias. Part history lesson, part text book, part novel, all true, it flows beautifully. The investments have to have an expected payoff of greater than poundsyone Before I get into the review of this excellent and very interesting book I want to relate an experience I had some years ago, sometime in the early s.

Which sounds a bit paradoxical. So, if you are betting on gortune horse race you would bet on all of the horses running in that race according to how well you believe each might go.

It turns out I’ve been reading Mr. The Wrong Side of Goodbye.

Indeed, such an event should not occur even if the stock market were to enjoy a rebirth for 20 billion years in each of 20 billion big bangs.