Edward O. Thorp Quotes

“Just because a lot of people say something is true, that doesn’t carry any particular weight with me.

You need to do some independent thinking, especially about the important things, and try to work them out for yourself.

Check the evidence. Check the basis of conventional beliefs.”

“A small extra gain is generally not worth the substantial risk the deal will break up.”

“Be aware that information flows down a 'food chain', with those who get it first 'eating' and those who get it late being eaten.”

“Character is destiny.”

“Chose young smart people just out of university because they were not set in their ways from previous jobs. Better to teach a young athlete who comes fresh to his sport than to retrain one who has learned bad form.”

“Do not assume that what investors call momentum, a long streak of either rising or falling prices, will continue unless you can make a sound case that it will.”

“Education builds software for your brain.”

“Gambling is a tax on ignorance. People often gamble because they think they can win, they’re lucky, they have hunches, that sort of thing, whereas in fact, they’re going to be remorselessly ground down over time.”

“I don’t object to some people being richer, even much richer, than others. I object to gain of wealth through political connections rather than earning it by merit.”

“I learned the value of withholding judgement until I could make a decision based on evidence.”

“If a basketball franchise pays my neighbor Kobe Bryant $20 million a year because it takes that much to get him, fine. But if hedge fund managers bribe politicians to put a clause in the laws cutting the tax rate on much of their income to a fraction of the percentage the average worker pays, I object.”

“If you are like me and want better health, you can invest time and money on medical care, diagnostic and preventive measures, and exercise and fitness. For decades I have spent six to eight hours a week running, hiking, walking, playing tennis, and working out in a gym. I think of each hour spent on fitness as one day less that I’ll spend in a hospital.”

“In its simplest form, investors sell losing stocks before the end of the current year, realizing losses that reduce the year’s income taxes. This behavior contributes to the so-called January effect where selling pressure in December further depresses the stock prices of the year’s losers, followed by a rebound and excessive performance in January.”

“In order to attract and keep superior staff, I paid wages and bonuses well above the market rate. This actually saved money because my employees were far more productive than average.”

“In the abstract, life is a mixture of chance and choice. Chance can be thought of as the cards you are dealt in life. Choice is how you play them. I chose to investigate blackjack. As a result, chance offered me a new set of unexpected opportunities.”

“It doesn’t pay to push the other party to their absolute limit. A small extra gain is generally not worth the substantial risk the deal will break up.”

“Life is like reading a novel or running a marathon. It’s not so much about reaching a goal but rather about the journey itself and the experiences along the way.”

“Nassim Taleb asked why, after a driver crashes his school bus, killing and injuring his passengers, he should be put in charge of another bus and asked to set up new safety rules.”

“Our corporate executives speculate with their shareholders’ assets because they get big personal rewards when they win—and even if they lose, they are often bailed out with public funds by obedient politicians. We privatize profit and socialize risk.”

“Shortsighted things that people sometimes do for their individual self-interest don’t tend to work out well in the long run.”

“Simple probability and statistics should be taught in grades kindergarten through twelve and that analyzing games of chance such as coin matching, dice, and roulette is one way we can learn enough to think through such issues.”

“Simplify rules, regulations, and laws. Get government out of the business of micromanaging.”

“The classic view of the correct price of a common stock is that it is derived from the value of all the future earnings. These earnings are uncertain and subject to unknowable factors.”

“The lesson of leverage is this: Assume that the worst imaginable outcome will occur and ask whether you can tolerate it. If the answer is no, then reduce your borrowing.”

“There are inefficiencies in the market, but they’re not easy to demonstrate, and I think that needs to be done before one shifts money in that direction.”

“Thousand-dollar-an-hour New York professionals who pay $50 an hour for a car and driver so they can work while they commute understand clearly the monetary value of their time.”

“To beat the market, focus on investments well within your knowledge and ability to evaluate, your 'circle of competence'.”

“To get an idea of what your time is worth, take a moment now to think about how much you work and the income you get from your effort. Once you know your hourly rate you can identify situations where buying back some of your time is a bargain and other situations where you want to be selling more of your time. As you get used to thinking this way, I predict that you will often be surprised at how much you can gain.”

“True success is exiting some rat race to modulate one’s activities for peace of mind.”

“Understanding and dealing correctly with the trade-off between risk and return is a fundamental, but poorly understood, challenge faced by all gamblers and investors.”