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Investing Lessons From Edward Thorp, Quant Pioneer And Card Counter
In the mid 80s, I moved to Las Vegas and played blackjack for a living. It was an interesting experiment that lasted about six months.
Playing serious blackjack taught me several things including how I would later approach investing and day trading.
It taught me to stand tall when I had an edge and stand back when I didn’t. It taught me to believe in what I saw and not merely what I thought. It taught me that it was possible to win big. It taught me to accept small losses – because that’s part of the game. It taught me that even with an edge over the casino and when I was comfortably ahead, I didn’t have the stomach to push for the sky.
If you’ve ever played blackjack and attempted to count cards, you know it’s not easy. You learn to count the cards, then practice, practice, practice.
When you think that you’re good at it, you then slowly, cautiously apply it in a casino, only to discover that the action is much too fast and you’re not as good as you thought. So then, it’s back to practicing again… and you never stop practicing.
- This quant pro and card counter says gambling can make you a better investor. Yes, absolutely. But be careful gambling. House generally wins.
- Try to figure out what your skill set is and apply that to the markets. Love that line. So much petty nit-picking here from time to time about what one investor or the other is doing. I'd rather say: There's more than one way to skin a cat. Figure out your own game plan and than try to improve on it.
- As most here probably know, Bill Gross was also a blackjack card counter before he managed money. While it's become fashionable in recent years to knock Ol' Bill, he remains one of the greats in my book.
Comments
In the mid 80s, I moved to Las Vegas and played blackjack for a living.
It was an interesting experiment that lasted about six months.
Playing serious blackjack taught me several things including
how I would later approach investing and day trading.
It taught me to stand tall when I had an edge and stand back when I didn’t.
It taught me to believe in what I saw and not merely what I thought.
It taught me that it was possible to win big.
It taught me to accept small losses – because that’s part of the game.
It taught me that even with an edge over the casino
and when I was comfortably ahead, I didn’t have the stomach to push for the sky.
If you’ve ever played blackjack and attempted to count cards,
you know it’s not easy.
You learn to count the cards, then practice, practice, practice.
When you think that you’re good at it, you then slowly,
cautiously apply it in a casino, only to discover that the action
is much too fast and you’re not as good as you thought.
So then, it’s back to practicing again… and you never stop practicing.
Yes, absolutely. But be careful gambling. House generally wins.
- Try to figure out what your skill set is and apply that to the markets.
Love that line. So much petty nit-picking here from time to time about what one investor or the other is doing. I'd rather say: There's more than one way to skin a cat. Figure out your own game plan and than try to improve on it.
- As most here probably know, Bill Gross was also a blackjack card counter before he managed money. While it's become fashionable in recent years to knock Ol' Bill, he remains one of the greats in my book.
Great article @Ted
Great post by @Flack as well