Putting the Cards on the Table: A Talk with Edward O. Thorp, PhD

10 Pages Posted: 5 Aug 2011

Date Written: July 1, 2011

Abstract

University professor, Vegas gambler, financial innovator, and “godfather of the quants”: Edward O. Thorp has managed to combine several careers into one. By applying his background in mathematics to the real-world challenges of gambling, Dr. Thorp devised a proven method for winning at blackjack in the casinos of Las Vegas using an innovative method of counting cards. The next step was to take his game to, in Dr. Thorp’s words, “the biggest casino in the world”: Wall Street. Acknowledged as perhaps the first of the “quants” - those who use quantitative analysis techniques - Dr. Thorp combined mathematical theory with the power of computers to effectively forecast stock market moves. Pioneering the use of quantitative methods for asset management, he established the first market-neutral hedge fund and devised various ways to exploit market inefficiencies.

In late January 2011, Dr. Thorp spoke with members of the Journal of Investment Consulting’s Editorial Advisory Board about the relationship between gambling and investing, his interest in finding practical applications for theoretical models, and his thoughts on market efficiency.

Keywords: Edward O. Thorp

JEL Classification: G10, G11

Suggested Citation

Institute, Investments & Wealth, Putting the Cards on the Table: A Talk with Edward O. Thorp, PhD (July 1, 2011). Journal of Investment Consulting, Vol. 12, No. 1, pp. 5-14, 2011, Available at SSRN: https://ssrn.com/abstract=1896627

Investments & Wealth Institute (Contact Author)

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