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Most Helpful Customer Reviews
3 of 3 people found the following review helpful
Format:Paperback
This book is an entertaining and non-technical biography of the Kelly criterion -- a betting equation which shows you how much of your wealth to bet on each round of a profitable gamble so as to maximise the growth rate of your wealth.
Suppose you might a biased coin which will land heads twice as often as tails. A fellow gambler is willing to offer even odds against heads; how much should you bet on this profitable gamble? Assuming the bet can be repeated many times, you shouldn't stake your entire bankroll on the first gamble, as, if you lose, you will be unable to gamble again. The Kelly criterion shows you which fraction of your net worth to bet on this gamble -- or any other profitable gamble -- so as to maximise your average end wealth.
William Poundstone describes the life of the Kelly formula by introducing us to some of its most famous users: Ed Thorp, who used it when counting cards at blackjack and in his early hedge fund; and Claude Shannon, who used it in his stock market speculation and who built a roulette wheel prediction device with Thorp. Poundstone also explains how the partners of Long-Term Capital Management (LTCM) would have done well to heed the formula's advice. He also covers the spirited academic debate behind the formula: including the links it shares with the work of Daniel Bernoulli, and Paul Samuelson's witty opposal to its overuse (there are many good reasons to bet less than the amount implied by the Kelly formula).
This is another five star book from William Poundstone.
Suppose you might a biased coin which will land heads twice as often as tails. A fellow gambler is willing to offer even odds against heads; how much should you bet on this profitable gamble? Assuming the bet can be repeated many times, you shouldn't stake your entire bankroll on the first gamble, as, if you lose, you will be unable to gamble again. The Kelly criterion shows you which fraction of your net worth to bet on this gamble -- or any other profitable gamble -- so as to maximise your average end wealth.
William Poundstone describes the life of the Kelly formula by introducing us to some of its most famous users: Ed Thorp, who used it when counting cards at blackjack and in his early hedge fund; and Claude Shannon, who used it in his stock market speculation and who built a roulette wheel prediction device with Thorp. Poundstone also explains how the partners of Long-Term Capital Management (LTCM) would have done well to heed the formula's advice. He also covers the spirited academic debate behind the formula: including the links it shares with the work of Daniel Bernoulli, and Paul Samuelson's witty opposal to its overuse (there are many good reasons to bet less than the amount implied by the Kelly formula).
This is another five star book from William Poundstone.
39 of 45 people found the following review helpful
Format:Hardcover
This is a fascinating book about the sociology of ideas and, specifically, about information theory. Author William Poundstone explores how Claude Shannon, the major developer of information theory, affected finance, investing and gambling. These activities seem disconnected, but they all rely on managing uncertainty. Like any great idea, information theory attracted major personalities: gamblers, mobsters, academics, economists, traders and people who just wanted to make money. The story weaves through a collection of memorable people (from seventeenth-century mathematicians to Ivan Boesky) to present pertinent mathematical and scientific theories, and to explore how people used them. At times, the connections between events seem strained, but they all come together. This book is encyclopedic, exceptionally informative, and packed with great stories and characters. We enthusiastically recommend it to anyone seriously interested in investing, the sociology of ideas, or gambling. Indeed, read it twice: once for its theories and practical investment advice, and the other to relish its personalities.
2 of 2 people found the following review helpful
Format:Paperback
I liked the historical background to the Kelly formula, melding the criminal and academic influences that proposed and applied the formula.
However it was sad in a way to see how Shannon's creative genius seemed to be dampened once he began his stock market meddling, indeed it could be said that the principle characters wasted their lifes in the pursuit of money. I guess the book could , I believe unintentionally, be seen as a warning for those who wish to engage in get rich quick schemes.
However it was sad in a way to see how Shannon's creative genius seemed to be dampened once he began his stock market meddling, indeed it could be said that the principle characters wasted their lifes in the pursuit of money. I guess the book could , I believe unintentionally, be seen as a warning for those who wish to engage in get rich quick schemes.
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Most Recent Customer Reviews
brilliant!
this book gives the best explaination on kelly formula - fact. apart from that it's a in depth story on investment theory and card counting in vegas to name a few wonders of this... Read more
Published 8 months ago by Gcrikey
Engrossing - and also useful
Other reviewers have remarked on how entertaining this book is; those who have read some of Poundstone's other works will find this no surprise. Read more
Published 12 months ago by Robert Matthews
Good deal
The book came in a really good condition and within the time frame that was settled! This seller is recommendable.
Published 14 months ago by Alex
Fortune's a jade
William Poundstone, for my money, is the best science writer operating today. If you can bear Malcolm Gladwell, you'll appreciate the quality when you make the switch to... Read more
Published 14 months ago by James-philip Harries
Do you want to get rich quickly?
Fortune's Formula by William Poundstone can be said to be about the Kelly Criterion; a way to deal with uncertainty that gives the best return for your money without running the... Read more
Published 16 months ago by A. P. J. Jansen
Enlightening
This a very well written and very interesting book. He is very good on the personalities involved and on the more technical areas. Read more
Published 17 months ago by The Emperor
Informative, well-written and thoroughly enjoyable
This book manages to educate, entertain and inform in several different ways. We have the stereotypically eccentric academics taking on the casinos and the markets and winning. Read more
Published 17 months ago by S Gleadall
Kelly formula for calculating investment bets
I picked up this book because Mohnish Pabrai, the author of The Dhandho Investor, recommended it. The author describes the Kelly Formula that was developed by John Kelly at Bell... Read more
Published on 15 Nov 2009 by Mariusz Skonieczny
Brilliant Book
An extremely enjoyable read. Could have benefited from some more technical detail and some of his financial economics was a bit flakely but he writes about the personalities... Read more
Published on 2 Jan 2009 by DP
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