Fortune's Formula

The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street

By: William Poundstone

Narrated by: Jeremy Arthur

In 1956 two Bell Labs scientists discovered the scientific formula for getting rich. One was mathematician Claude Shannon, neurotic father of our digital age, whose genius is ranked with Einstein's. The other was John L. Kelly Jr., a Texas-born gun-toting physicist. Together they applied the science of information theory - the basis of computers and the Internet - to the problem of making as much money as possible as fast as possible.

Shannon and MIT mathematician Edward O. Thorp took the "Kelly formula" to Las Vegas. It worked. They realized that there was even more money to be made in the stock market. Thorp used the Kelly system with his phenomenally successful hedge fund, Princeton-Newport Partners. Shannon became a successful investor, too, topping even Warren Buffett's rate of return. Fortune's Formula traces how the Kelly formula sparked controversy even as it made fortunes at racetracks, casinos, and trading desks. It reveals the dark side of this alluring scheme, which is founded on exploiting an insider's edge.

Shannon believed it was possible for a smart investor to beat the market - and Fortune's Formula will convince you that he was right.

PLEASE NOTE: When you purchase this title, the accompanying reference material will be available in your Library section along with the audio.

©2005 William Poundstone (P)2017 Macmillan Audio

One of my favorite books now

So many big names connected. If you are interested in gambling, markets, information theory, the mob, and the history of many famous smart people, you will love this book. It connects the histories of so many people, it is hard to really summarize. I think overall it is about the kelly formula, but it covers so many other formulas as well, and mostly covers people as they try to beat the systems and make money

Great story. Small pronunciation quirks

I am used to "arithmetic" as a noun being pronounced differently from arithmetic as an adjective

Fascinating and gripping

Mobs, Fixed horse races, hedge funds losing billions in a few months. Fascinating.

I wish it had went over how to use the Kelly criterion which is what I came for but the story and reasoning in this book is incredible.

loved the book and recommended it.

awesome book. learned about statics and investment relationships. highly recommend thus book. it is not just about investment it could be used for life lesson.

Very entertaining. Also leads to much further research

I really enjoyed this book. It references most of the important figures that occupy the Venmo diagram of quantitative finance, gambling, and statistics/probability theory. Really cool listen.

Incredible

A surprisingly varied and engaging story that connects wildly different ideas. A great story for any day

Complete

A little long, but complete briefing of real (important) financial market for comum investor.

Kelly criterion but much more

This book has a rich detail of organized crime in America to the rise of quant hedge funds all tying back to Ed Thorpe. While Thorpe has his own autobiography the man who beat the market this book is an interesting companion

Wonderful book

Really appreciated this book.
It highlights the importance of scientific thinking and the many benefits one can gain from utilizing it practically.

Could be MUCH shorter

Oddly the narrator repeatedly refers to the accompanying PDF which I could not find. I emailed support about this.

Nevertheless this was a fine book describing the Kelly formula for investment/betting decisions. This remarkably simple formula is powerful, widely applicable, and easy to understand. In fact, it is so easy to understand most of this book is unnecessary to understanding the formula. Much of the book is very mildly interesting stories about shady bookies and investment managers that have little, or nothing, to do with the Kelly Formula along with various other investment/betting strategies having nothing to do with the Kelly Formula.

I was not impressed with the presentation of the St. Petersburg Paradox. It is well described, but the underlying reason for the paradox seems to be completely missed. This is important because the book later discusses the differences between using the arithmetic verse geometric means. The important take away from the St. Petersburg Paradox is that any mean is worthless if the variance is too large. This variance problem is touched on elsewhere in the book, but it is not appropriately highlighted.

The narration is really excellent.

I enjoyed this book but it would have been better if much more focused on simply understanding the Kelly Formula.