Quotes from Edward O. Thorp

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

In the abstract, 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. I chose to investigate blackjack. As a result, chance offered me a new set of unexpected opportunities.

The people who run the casino are tough and smart is so many ways, but they belong in the Dark Ages...They explain the phenomena of their world the way the ancient astrologers did. They really believe that dice get hot.

Our corporate executives speculate with their shareholders' assets because they get big personal rewards when they win—and even if they lose, they are often bailed out with public funds by obedient politicians. We privatize profit and socialize risk. The

I wondered how my research into the mathematical theory of a game might change my life. In the abstract, 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.

simple probability and statistics should be taught in grades kindergarten through twelve and that analyzing games of chance such as coin matching, dice, and roulette is one way we can learn enough to think through such issues.

Lesson: Do not assume that what investors call momentum, a long streak of either rising or falling prices, will continue unless you can make a sound case that it will.

also learned from my losing silver investment that when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This is the well-known agency problem in economics, where the interest of the agents or managers don't coincide with those of the principals, or owners. Shareholders of companies that have been pillaged by self-serving CEOs and boards of directors are painfully familiar with this.

One of my great pleasures from the study of investing, finance, and economics is the discovery of insights about people and society. The physical sciences have rules such as the law of gravitation that generally hold true in the world as we know it. But human beings and the way they interact aren't covered by broad, unchanging theories and may never be. Instead I've come across more limited concepts that tie things together and serve as shortcuts to understanding.

Smith suggested that in an economy of many small buyers and sellers, each trying to increase his own profit, our collective benefit would be maximized as though guided by an "invisible hand." The notion is of limited use, because most markets are not as Smith assumed. Take computer chips: 99.8 percent of them, worldwide, are made by just two US companies, and the smaller one is fighting to survive.

I also learned from my losing silver investment that when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This is the well-known agency problem in economics, where the interest of the agents or managers don't coincide with those of the principals, or owners.

On a global scale we have the example of pollution. Individual humans have freely burned fossil fuels and greatly increased the amount of greenhouse gases such as CO2, leading to a continuing rise in the earth's temperature over the last century. The tiny particles also emitted have caused lung diseases and deaths. But each polluter gains more individually from his own actions than he loses, so he has no direct pressure to change.

Let me be clear. I don't object to some people being richer, even much richer, than others. I object to gain of wealth through political connections rather than earning it by merit.

even much richer, than others. I object to gain of wealth through political connections rather than earning it by merit. If a basketball franchise pays my neighbor Kobe Bryant $20 million a year because it takes that much to get him, fine. But if hedge fund managers bribe politicians to put a clause in the laws cutting the tax rate on much of their income to a fraction of the percentage the average worker pays, I object.

used Occam's razor—the principle that given more than one explanation, you should begin by choosing the simplest one—and plausible reasoning to arrive at a neat formula for determining the "correct" price of a warrant.

simplify rules, regulations, and laws. Get government out of the business of micromanaging.

Not all our investors reacted with such aplomb, but every last one of our more than ninety limited partners stood fast. No one asked to withdraw.

when the interests of the salesmen and promoters differ from those of the client, the client had better look out for himself. This

As Princeton Newport Partners closed I reflected on the proposition that what matters in life is how you spend your time. When J. Paul Getty was the richest man in the world and manifestly not fulfilled, he said the happiest time of his life was when he was sixteen, riding waves off the beach in Malibu, California.

Heller said he had something the rich man could never have. When a puzzled Vonnegut asked what that could be, Heller answered, "The knowledge that I've got enough.

Freud said that once we have the basic necessities of food, clothing, shelter, and health, then what we seek is wealth, power, honor, and the love of men and women. For financial titans who aggressively continue to seek tens of millions, hundreds of millions, and sometimes billions, you can ask, "Is the winner really the one who dies with the most toys?" How much is enough? When will you be done? Often the answer is "Never.

This phenomenon has been called the wisdom of crowds. But like most simplifications, this has a flip side, as in the Madoff case. Here there were just two answers, fraudster or investment genius. The crowd voted for investment genius and got it wrong. I call the flip side to the wisdom of crowds the lunacy of lemmings.

However, every time we agreed on a deal, the GP insisted on making yet another change in his favor. After we had agreed to some of these, it became apparent that they were endless. I terminated negotiations.

At our absolute limit, we were almost indifferent as to whether we did the deal or not. Meanwhile the seller had now alienated us, and we preferred not to have any further dealings with him. Consequently his deal was less attractive, and our top price now dropped below $405,000. Meanwhile we considered alternatives. We soon bought a better lot, built a new house, and spent twenty-two happy years there. The haggler's lot remained unsold for another decade.