The House Advantage: Playing the Odds to Win Big In Business [Hardcover]

We're not designed to think unemotionally nor about abstract statistics. But Ma's book shows us that if we do learn to do so, we can achieve something we are designed to pursue--success. This book outlines and explores just how to do that. It's a great read for various demographics: the not-so-business savvy who wants to become so; the "layperson" looking to find ways for making better life-decisions; or the expert businessperson looking to uncover an edge in bringing down their own sort of house.

Ma describes things for the reader that will get you up to speed on both your gambling--i.e. the nuances of 21--and your business-speak--i.e. I finally learned what an option is and then how it relates to volatility and the Mexican economic crisis' affect on the U.S. dollar--without turning the expert off in either arena. Not an easy task as a writer and is done exceptionally well here.

The book is of the same genre as Lewis' Moneyball (a book Ma cites as life-changing in the Acknowledgments). Ideal for the neophyte interested in economics, finance, etc., combining the highfalutin world of casino gambling with modern day finance. In a sense, Ma urges us to put our faith in something that we believe in--which is rooted in clear thinking and statistics--and forge ahead, regardless of the valleys that may occur in the arena of "ups and downs."

Ma uses well-told personal anecdotes to explain cognitive errors common in academic psychology such as the gambler's fallacy and confirmation bias. Clearly not a man of superstition, frowning up on the "same-roller" phenomenon in craps and the concept of `statistical atheist', making sure the reader knows he's not involved in magic or some form of voodoo. Instead, he employs a more stoic approach that follows the logic--follows the math--and never gives up.

This book isn't just fun, it isn't just interesting (though it is both of those) but it's also something that will help the reader make better decisions both inside the business world and out.

As someone with a very similar background to Ma's (engineering background, entrepreneur funding a company while playing poker professionally, and heavily involved in sports analytics from a predictive standpoint) I found this book to be an an articulation and formalization of concepts that every successful gambler has honed and inherently understands and has a tough time explaining to the general population. By definition, gamblers have trained themselves to evaluate the EV of every situation and make the most +EV decision while remaining emotionally detached from the results. Successful gamblers also understand bankroll management and non-results oriented thinking. We're trained to learn from trial and error, to correct mistakes via feedback, but variance has an inherent way of throwing these feedback mechanisms off. The way to better decisions, as Ma says, is to understand the underlying mathematics, ask the right questions, and maintain discipline.

Perhaps the most glowing recommendation I can make about this book is via my own personal experience. For the past couple months I've had a conversation with my father, a trained engineer and a brilliant man, about poker and investing. Each time, I tried to make the case for non results oriented thinking. The first example, I brought up the fact that I was up a large amount playing poker in Vegas and ended up marginally up. His statement is that I should have quit while ahead while my argument was that as long as I had an advantage (I was +EV in the game) I should try to realize this advantage by playing as many hours as possible, because in the long run, I'd hit my hourly expectation. He argued while that was true, my time horizon in Vegas was 1 weekend. I tried, unsuccessfully to argue with him that my time horizon was every time I played poker going forward, assuming my underlying assumptions about my EV in the game was still correct.

Likewise, he owned a stock that he bought at 3.00 which went to 16.00. He didn't sell it and kept saying he should have sold it while I argued that the stock was either +EV to own (undervalued), or overvalued and he should sell. If he thought it was undervalued, he should buy more, wagering a portion of his retirement account (his bankroll) proportionate to his edge. The fundamental mistake he made was overbetting on that stock and his inability to separate himself emotionally from the results given his limited time horizon (retirement looming).

Ma's text does a great job of explaining these concepts to someone who hasn't honed these thought processes, someone with no gambling or statistical background.

I think the book could have used a little bit more detail and explanation of some of the technical concepts. While Ma does a great job of simplifying the concepts, he doesn't provide very in depth technical explanation (he may have lost his audience). For example, more specifics on some of the metrics the 49ers used, more in depth explanation of the Kelly criterion, expected growth, how to manage an investment bankroll in relation to Kelly.

Either way, it's a book that I think everyone should read and those familiar with the concepts will gain something from it.

As someone who has read many different books and articles on the subjects of investing, gambling, sports analytics, and business, I think Jeff Ma has done an incredible job of melding his experiences as a blackjack winner, successful entrepreneur, and sports consultant to write a fascinating, cohesive book with practical applications for anyone looking to effectively solve problems across various diverse areas of interest.

The book does a great job of taking some of the most common problems that can derail a successful venture and showing you how to achieve better results using an objective reality-based approach to problem solving. To help, he uses numerous real world examples through discussions with an interesting array of successful players in business, sports, finance, and gambling (see the list of impressive blurbs for the book) to help drive home many important principles that somehow get overlooked these days (for example: this past financial crisis).

Throughout the book, Ma shows how focusing on objectivity and data will help you make better decisions but, even more importantly, he is not a slave to numbers and constantly points out that making the right decision is way more than just access to and using numbers, it's also about asking the right questions and making sure you're interpreting your data properly so that it makes sense. His chapter on correlation versus causation is especially good at this as it points out just how important it is to think through what numbers mean as opposed to blindly following them.

Some of the most impressive chapters are towards the end of the book when he writes about how to humbly and simply present stats and data-analysis to people who are naturally predisposed to dislike and be turned off by math as well as a discussion of successful people who use their gut and intuition to make the correct decisions. Again, it shows that Ma isn't interested in using numbers and data as his only weapon in a fight to prove his method is the only correct one but as tools to help him come to the right decision. That type of nuanced thinking is valuable as it's frequently overlooked in the statistical community where dogma causes people to be dismissive of thinking that doesn't mesh with theirs which hurts the ultimate goal of being able to achieve successful results.

I've recommended this book to the partners of the investment management firm I work at as I think it does a great job of presenting important business and investing concepts simply and effectively and I look forward to Ma's future projects.