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A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and Market – Edward O. Thorp

5th June 2023
a man for all markets book cover

Introduction

A Man for All Markets contains Edward O. Thorp’s life story and his wisdom. This book was recommended in Richer, Wiser, Happier. The is my fourth book from its recommended book list. The author hopes his story will help the readers think differently about gambling, investments, risk, money management, wealth-building, and life. I would like to see if I can learn new things in this book.



Author

For more information about Edward O. Thorp, you may refer here.



Contents

A Man for All Markets has a preface, a foreword by Nassim Taleb, 30 chapters, and an epilogue.

The chapters are:

1. Loving to learn

2. Science Is My Playground

3. Physics and Mathematics

4. Las Vegas

5. Conquering Blackjack

6. The Day of the Lamb

7. Card Counting for Everyone

8. Players Versus Casinos

9. A Computer That Predicts Roulette

10. An Edge at Other Gambling Games

11. Wall Street: The Greatest Casino on Earth

12. Bridge with Buffett

13. Going into Partnership

14. Front-Running the Quantitative Revolution

15. Rise…

16. … And Fall

17. Period of Adjustment

18. Swindles and Hazards

19. Buying Low, Selling High

20. Backing the Truck Up to the Banks

21. One Last Puff

22. Hedging Your Bets

23. How Rich Is Rich?

24. Compound Growth: The Eighth Wonder of the World

25. Beat Most Investors by Indexing

26. Can You Beat the Market? Should You Try?

27. Asset Allocation and Wealth Management

28. Giving Back

29. Financial Crises: Lessons Not Learned

30. Thoughts



Review

A Man for All Markets is the author’s memoir. He reminisces about his childhood and his career pathway. He was not from a privileged background and is a self-made man. From his recollection, it is clear that he was a lawbreaker and prankster at young age. Luckily, he did not continue on that path.

The author thinks that gambling is investing simplified. A fundamental challenge faced by all gamblers and investors is understanding and dealing correctly with the trade-off between risk and return. Under fairly general assumptions, the casino’s advantage could not be overcome by varying the size of your bets. The surest way to get rich is to play only gambling games or make investments where we have an edge. To have an edge, the game’s outcomes should be independent, and the probabilities can be computed and other player’s bets would not affect the payoffs.

To be a successful card counter, an academic understanding is not enough. You have to think quickly, be disciplined enough to follow the system, have a suitable temperament, including the ability to switch your mind into the here and now and stay focused on the cards, the people, and surroundings. You also have to act like the type of player with which the casinos are familiar. To know more about how to beat casinos in the game of blackjack, you may read Beat the Dealer.

The author says that most stock-picking stories, advice, and recommendations are completely worthless. He also advises against assuming that momentum, a long streak of either rising or falling prices, will continue unless you can make a sound case that it will. What appears random for one state of knowledge may not be if we are given more information. Future prices are not predictable and no one can beat the market, but only when market prices “truly” fluctuate randomly. Undervaluing deferred benefit is a widespread investment error and seems to be part of our basic psychological makeup.

The general rule for stock market is that the market’s good years have to be better than its bad years just to come out even. Doing better than the market is often simply luck; while beating the market is finding a statistically significant edge that makes sense and profiting from it. Although the author did beat the market, he recommends passive indexing as the preferred investing method. The author gives advice on wealth management too. However, some recommendations can only be applied in US.

One-sentence summary for A Man for All Markets: Beating the market is possible, but it is not recommended for the general public.



Quotes

  1. A model is a simplified version of reality, like a street map that shows you how to travel from one part of a city to another or the vision of a gas as a swarm of tiny elastic balls ceaselessly bouncing against one another.
  2. True success is exiting some rat race to modulate one’s activities for peace of mind.
  3. Life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them.
  4. Any luck, good or bad, would be random, unpredictable, and short-term. In the long run it would be unimportant.
  5. Life is like reading a novel or running a marathon. It’s not so much about reaching a goal but rather about the journey itself and the experiences along the way.


Rating

3 out of 3 stars



Interested in A Man for All Markets?

You may get the book from through the link below*.

Get the print book from Kinokuniya Malaysia here

*Disclosure: The above link is an affiliate link. Thus, I may earn a small commission when you purchase the book through the link.

2 Comments

  • Betting Exchange 12th July 2023 at 3:18 pm

    Thank you for sharing your personal experience on this topic “A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and Market – Edward O. Thorp”. It adds a relatable touch to the article and helps readers connect on a deeper level. I look forward to reading more from you.

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