Edward Thorp, a mathematician who beat casinos and the stock exchange
There are numerous mathematical strategies that allow you to beat the casino or make money on the stock market. However, relatively few people can use them effectively.
Edward Thorp is one of those who not only successfully used mathematical strategies for making money but also directly developed them. He is particularly well-known among gamblers trying to beat the casino.
Thorp is also a legendary figure who has distinguished himself in various fields, especially those related to making money.
His work has resulted in a capital of almost a billion dollars, most of which was earned through stock trading.
Furthermore, Edward is not only a renowned trader but also the author of several popular books on the use of mathematical approaches in gambling and was one of the first to invent a portable computer for casino gaming.
Edward Thorpe's Hard Road to Success
The future genius was born in 1932 to Swedish immigrants. His father worked as a security guard, and his mother was a homemaker. His exceptional mathematical abilities were evident early in life.
Thanks to his phenomenal memory and his father's efforts, Edward had mastered the basics of mathematics by the age of five and could mentally calculate three-digit numbers. He also easily memorized large passages of text.
At the time, specialized schools for gifted children did not yet exist in Chicago, so Thorp attended a regular public school.
Even as a child, he realized his family would be unable to afford a university education and was forced to earn his own money, saving his earnings for his future studies.
Unfortunately, working lawn care, shoveling snow, and delivering newspapers didn't provide much income, and in high school, he realized he would never be able to save for college. Then the decision was made to take a different path: to win citywide Olympiads in school subjects, which would qualify him for free tuition at one of the chosen schools.
His diligent study paid off, and Edward took first place in the Physics Olympiad, allowing him to enroll at a prestigious California university. There, he again had to work part-time to provide for his living expenses.
Is it impossible to beat the casino?
After graduating, Edward found himself in a casino for the first time and, surprisingly, even won a small amount of money. That evening, a debate arose among his friends: "Is it possible to beat the casino?" and he decided to test this idea in practice.
He first experimented with a homemade roulette wheel, then moved on to card games, settling on Blackjack, a game more familiar to us as 21 or otko.
After a series of experiments and visits to casinos, he developed a strategy that involved counting the cards remaining in the deck, or rather their combinations. The strategy yielded good results, but was very labor-intensive and required a great deal of calculation. Thorp created a portable computer for these calculations.
The strategy he devised truly allowed him to beat more than one casino and even amass a sizable fortune.
The path of the future investor
The casino wasn't Edward's only occupation; he also taught mathematics at several American universities.
At 32, he became fascinated with stock trading and investing, and began self-studying financial theory and the fundamentals of the stock market.
This passion resulted in the development of a stock trading system that utilized hedging and offered the potential for up to 25% annual returns.
Five years after discovering the stock market, Thorp and his partner created an investment hedge fund called Convertible Hedge Associates. The fund's initial capital was only $1,400,000.
Ten years later, the fund managed $28 million, with an average annual return approaching 18%. This was a relatively good result at the time, as the fund had successfully weathered several stock market crashes.
Following a scandal in 1987, in which some fund employees were accused of fraud, its operations were suspended. In 1992, Edward Thorp opened a new fund, which lasted eight years with an average annual return of 21%.
After 2002, at the age of 70, Edward retired from managing the fund and moved to private investments.
Edward Thorp credits a good education and the ability to properly utilize existing advantages as the secret to his success. In his opinion, everyone has an equal chance of success, but not everyone can take advantage of them.
You can read more about the strategies devised by this brilliant mathematician in his book - http://time-forex.com/knigi/chelowek-na-wse-rynki
