Description In two Bell Labs scientists discovered the scientific formula for getting rich. He wrote a research paper about this, toning down the title somewhat to increase its chances of being published. The “fortune’s forumula” referred to in the title is pretty dang interesting though — the Kelly criteria, which is the optimal percentage that should be wagered given the odds. Read more Read less. It reveals the dark side of this alluring scheme, which is founded on exploiting an insider’s edge. Ed Thorp is very curious and brilliant.
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Part history lesson, part text book, part novel, all true, it formupa beautifully. This book focuses on information theory as laid out by Claude Shannon and John Kelly’s application of that theory to investments, be they gambling in Vegas or on Wall Street.
Some of the cameo appearances in this book are really what make it — everyone from J Edgar Hoover to Paul Newman have walk on roles and these are gortunes very amusing.
Is this feature helpful? The “fortune’s forumula” referred to in wwilliam title is pretty dang interesting though — the Kelly criteria, which is the optimal percentage that should be wagered given the odds.
To see what your friends thought of this book, please sign up. Like cancer research and certain other areas of science, it serves as a reminder that science can be a popularity contest and the quality of the work is very much not the primary concern when it comes to who gets funding. A well-researched, entertaining narrative spanning from the early days of Bell Labs and the information age, to wall street scandals and racketeering charges. Claude Shannon gets significant coverage, although his direct contribution to finance is somewhat unclear; coverage of Ed Thorp is totally appropriate and h This book is a bit of an odd combination of history-biography like The Idea Factory: I also like this book because it blurs the line between “wagering” and “investing”.
Fortunately, the long rambles about various people involved in the ideas covered by this book are diverting. It reveals the dark side of this alluring scheme, which is founded on exploiting an insider’s edge. Part of the pleasure in reading this book is in the way that Poundstone exposes stupidity in what would seem to be high places. But there is a lot of ground covered, in many directions.
The idea behind getting a computer to sing a song is really interesting too. I read his Big Secrets and Bigger Secrets a long time ago. I’d recommend the book as an interesting historical look at some people who tried to beat the house – in gambling or investing – and as a primer on the Kelly method but I wouldn’t suggest that anyone head to Vegas or Wall St.
But what really makes this book so interesting is the light that Poundstone shines on two wllliam in the science of information, gambling and investing, namely Claude Shannon and Edward O. Write a customer review.
Book Review: ‘Fortune’s Formula’ by William Poundstone
To ask other readers questions about Fortune’s Formulaplease sign up. In investing, you generally do have an positive expected return.
The book is chocked full of good stories and explanations but it’s drawn out with stories that in my opinion are based solely off of people’s ego instead of there lack of understanding. And why it is so hard.
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Get to Know Us. One gets the feeling that author Poundstone wanted to leave out the math, so as not to intimidate the non-mathematical reader, but by doing that he doesn’t provide enough details on the Kelly formula. A look at practical math?
The title does refer to the Kelly Criterion, a particular method for choosing how much of your portfolio to bet in a way that simultaneously avoids any possibility of bankruptcy [assuming infinitely divisible bets] and maximizes expected compound growth.
Fortune’s Formula : William Poundstone :
Which sounds a bit paradoxical. Shannon became a successful investor, too, topping even Warren Buffett’s rate of return.
Pounrstone service to the world is to not invest. Jan 13, Mark rated it really liked it. If you enter Amazon through my site, and you buy anything, I get a small poundstoone. It turns out that a random walk is not terribly different from a compressed signal in noise, at least from a mathematical point of view. I started and quit this book a while back. Dec 08, Bo rated it it was amazing Recommends it for: