My guest today is William Poundstone, an American author, columnist, and skeptic. He has written a number of books including the Big Secrets series and a biography of Carl Sagan.
The topic is his book Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street.
In this episode of Trend Following Radio we discuss:
- Claude Shannon
- The connection between Al Capone
- The Kelly formula, bookmaking, and the telephone industry
- Bell Labs and information theory
- Why, when betting, if there’s a small chance of losing everything, you will eventually lose everything
- Criticisms of the Kelly criterion
- Ed Thorp, blackjack, and card counting
- Long-Term Capital Management
- Martingale vs. Kelly
- Early development of the Black-Scholes formula
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