Field Note #68. On "Wisdom of Ed Thorp"

(a) Edward Thorp, A Man for All Markets (2017)
(b) "Words from the Wise," AQR Interview with Ed Thorp (Jan. 2018), avail. online.

4 Main Ideas.

  1. Survival vs. Vanity.  
    "Strategies that allow you to survive are not the same thing as the ability to impress colleagues."  I've chosen poorly in the past.  Now, particularly in crypto, my firm conviction (for my style) is that survival = win. 
  2. Build Leverage around Disaster Case.
    "Assume that the worst imaginable outcome will occur and ask whether you can tolerate it.  If the answer is now, then reduce your borrowing."
  3. Sources of Edge: informational, analytical, timing, and discipline.  
    Of the four, discipline is the one that can be implemented here and now.  Discipline starts with following no. 1 above.
  4. Independence; Too Big to Win.
    "It is vastly less stressful to be independent--and one is never independent when involved in a large structure with powerful clients.  It is hard enough to deal with intricacies of probabilities, you need to avoid the vagaries of exposure to human moods.  True success is exiting some rat rate to modulate one's activities for peace of mind."

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