Book: 20240204 to 20240423, "A Man for All Markets" by Edward O Thorp

20240204 - Chapter 1: LOVING TO LEARN
20240204 - Chapter 2: SCIENCE IS MY PLAYGROUND

Another Genius.Compare him to Elon Musk, Carl Sagan and Richard Feynman, what's the difference?

Not much.

They have very high IQ, broad interest, good enough luck, and all can focus on study and work for long time. They are all happy to take risk, but at the same time be careful of not taking too much risk.

Surely there are many people with similar high IQ, but most of them did nothing distingushable in the end.

Life is harder dozens of years ago. It's quite difficult for most of young people to afford the cost of college, or learn by themselves. These days, thanks for the social welfare system and Internet, it's not obstacles anymore.

However, there are also way less distractions.

Are we going to have more genius which can push human perception boundary further?

20240220 - Chapter 3: PHYSICS AND MATHEMATICS

Bad luck quite often is just "a blessing in disguise".

If we spend time wisely, sooner or later, we will be rewarded.

20240222 - Chapter 4: LAS VEGAS

20240222 - Chapter 5: CONQUERING BLACKJACK

20240222 - Chapter 6: THE DAY OF THE LAMB

Which one is better? Value investment or gambling like Edward Thorp and Nassim Nicholas Taleb?

Both have solid foundation, but everyone can win through the former, and only experts can win through the latter.

20240310 - Chapter 7: CARD COUNTING FOR EVERYONE

20240310 - Chapter 8: PLAYERS VERSUS CASINOS

Many randomness in real world are not really random.

Find the pattern then we can beat them.

Stock market and insurance policy are good examples. Anything else?

20240310 - Chapter 9: A COMPUTER THAT PREDICTS ROULETTE

In the eyes of AI, the world doesn't have that much randomness.

Human have no chance to win any game against AI.

20240311 - Chapter 10: AN EDGE AT OTHER GAMBLING GAMES

The people in casino industry in 1960s is horrible. They really don't mind killing people for thousands of dollars, which equals to tens of thousands of dollars today.

What does that mean? Interact with poor people is dangerous, especially in poor area or developing countries.

20240312 - Chapter 11: WALL STREET: THE GREATEST CASINO ON EARTH

Anchoring could be the number one mistake investors made. Can we predict the future changes based on the data of the past? Only if it's science related, not for any social events.

Leverage/risk management could be the number two mistake.

Making money from mispriced options was good idea in 1960s, and that must helped the Wall Street to figure out the proper rights of options.

20240325 - Chapter 12: BRIDGE WITH BUFFETT

The world is quite small. Edward O Thorp and Warren Buffett are actually friends! They invest in each other's fund!

They have completely different investment strategy. However, they recognized each other's value at the very beginning. It seems they both analyze things from the first principle.

20240327 - Chapter 13: GOING INTO PARTNERSHIP

Because the adavantage that Edward O Thorp had, it's quite easy to make money for him. However, it's not easy to scale up quickly. How to influence rich people? How to let them trust you?

The corruption and inefficiencies in ivory tower by that time was already serious. Is it better now? I highly doubt it.

Politicians tried to use rules to minimize the problems, but rules cannot handle new problems.

What's the best way handling it? We need to get rid of political correctness. For example, we need to admit that any individual's life is not that important. Death and accident are part of the social system.

20240328 - Chapter 14: FRONT-RUNNING THE QUANTITATIVE REVOLUTION

It's still hard even with advanced mathematical edge.

PnP didn't make huge profit because they did everything they could to reduce risk. If they did with 5 time leverage like what LTCM did, it would be more than 100% profit per year.

In the end, Edward O Thorp still became a billionaire. Don't be too greedy.

20240328 - Chapter 15: RISE . . .

Finally I start to understand what happened in 1987, Black Friday. It's feedback loop caused by share price insurance!

Mr Thorp is bold, and has deep understanding about finance market.

20240410 - Chapter 16: . . . AND FALL

The problems exist in US financial market and politics today, were there 60 years ago, and may stay alive for the next 60 years.

The author really think ahead. Money is important, but after crossing some threshold, it's not that important anymore.

20240410 - Chapter 17: PERIOD OF ADJUSTMENT

If something looks like banana, taste like banana, then it's banana! This is what I learned from the fraud of Bernard Madoff.

If we are pretty sure that the stock price will go up or go down, we should not pursue the best price to buy or sell. Suboptimal price is acceptable. Same strategy applys to real estate transaction. We should not pursue extra $5K and risk losing the opportunity.

20240411 - Chapter 18: SWINDLES AND HAZARDS

Market is not perfect. But that's good. That make market antifragile.

But why HFT(high frequency trading)? Why give some trading companies 30 milliseconds to check the order pool? Increase liquidity? This is like stealing.

20240411 - Chapter 19: BUYING LOW, SELLING HIGH

I don't understand why LTCM took 30 to 100 times leverage, and only get 30+% profit, although paid much less transaction fees. Comparing with Princeton Newport Partners (PNP), it's not that attractive and the risk is much, much higher.

PNP also took leverage, but only 2 times. So it didn't need to worry too much about margin call. 20% profit after fees is astounding.

20240412 - Chapter 20: BACKING THE TRUCK UP TO THE BANKS

Does opportunity farming worth the cost? How much does Mr Thorp's time worth?

20240412 - Chapter 21: ONE LAST PUFF

Why did Berkshire Hathaway perform so good for 40+ years? Why Warren Buffett perform so good for more than 60 years?

The only thing that everyone agree, is that Berkshire Hathaway(15% for 2023) cannot beat SP500TR(26.29% for 2023) easily now. Why?

20240412 - Chapter 22: HEDGING YOUR BETS

There are so many traps in financial investment market.

1. Don't trust fame, position, etc.

2. Don't trust past historical record.

So, there is nothing we should trust. The only choice is passive index fund.

I think NASDAQ index is better than SP500, as creativity is the source of wealth.

20240412 - Chapter 23: HOW RICH IS RICH?

Does it matter?

It's interesting that Mr Thorp use 2% instead of 4% rule to calculate how much is needed for retirement.

20240422 - Chapter 24: COMPOUND GROWTH: THE EIGHTH WONDER OF THE WORLD

Compound growth should always be associated with risk and trend.

That's why we should pay off credit card debt first before doing any other investment.

20240422 - Chapter 25: BEAT MOST INVESTORS BY INDEXING

20240423 - Chapter 26: CAN YOU BEAT THE MARKET? SHOULD YOU TRY?

It's critical to look after risks. Even if you are right, the stupid market may still bury you.

And no one get all information. Accidents happen from time to time.

20240424 - Chapter 27: ASSET ALLOCATION AND WEALTH MANAGEMENT

I think the best allocation is NASDAQ index fund, primary home property and a bit of cash, crypto coins.

20240424 - Chapter 28: GIVING BACK

Agree.

Charity donation needs to be sustainable.

20240425 - Chapter 29: FINANCIAL CRISES: LESSONS NOT LEARNED

Agree with all of the author's opinions.

One question: how do the shareholders know that which executives are good?

For bonus of management layer, it should only be stock buy options with at least 7 years of lock time.

20240425 - Chapter 30: THOUGHTS
20240425 - Epilogue

Does the author has "attention" issue like almost everyone else?

The world is always under stress. A lot of good things mixed with a lot of bad things.

We need to be optimistic, but be careful about the unexpected negative impacts.