This reminds me of an anecdote out of one of Thorp's papers (2007). He joined forces with a computer science Ph.D and started sports betting. They were very profitable, but he listed three reasons why he stopped: 1) it required having someone in Vegas placing bets, 2) he believed it was risky to have someone going around with large amounts of cash in order to make bets, and 3) it wasn't competitive with his stock market trading strategy. He mentions how his belief about #2 unfortunately turned out to be correct, as apparently something happened in another group's operation.
Thorpe is a dyed in wool information theory, probability theory academic who happens to be a super cool hacker at heart *.
Among his many accomplishments are, him obtaining a more general version of Black-Scholes model, independently and before Black, Scholes and Mertens had derived theirs. You may recall that got them the Nobel prize.
Managing money and breaking Las Vegas casinos were one of his, side, and mostly academic, entertainments.
There is a nice story of him visiting Shannon to discuss an information theory research paper that he, Thorpe, was writing. The meeting had taken a lot effort to schedule -- Shannon was a busy man, already a celebrity. But then they ended up over-extending their scheduled meeting, discussing, brainstorming with playful eagerness, different mathematical methods to break several popular gambling games, starting with Blackjack. Turns out Shannon was a sucker for such entertaining hacks. (This would be one of the first formulations of card counting [0]) Thorpe and his students would then try these out in Vegas.
*Taking things apart logically, to probe where things break, to understand how they work, that's as quintessentially an exercise in hacking as you can get.
Prof Thorpe wrote about and proved his strategies along with characterizing the assumptions under which they would and had worked.
Finally, you are you and then there is Prof. Thorpe.
One thing I took note of was that he was a chemistry nerd in school.
It seems like the subject of nerd culture changed from waaay back when he was a kid being chemistry (you could make bombs), to electronics such as radio (you could do ham radio), to computers and then programming (video games).
Nowadays you won't find anyone who can tell you how chemistry works, and a few old guys will tell you how to solder your own electronics, but everyone will be able to tell you how to code a website.
Was also perhaps career focused on latest tech?? For example my granddad did structural engineering, my father studied chemical engineering, I did electronic engineering
It reads to me like he had he simple (relative to today) investment strategies which where profitable, and closed shop when those market inefficiencies started running dry.
He was also, at that point, very old. He started his first fund in 1968. It tells you something about the modern world that you can your fund successfully for three decades, accumulate one of the best all-time records, and you will still have people online call you useless if you bow out in your 70s when your returns go dry for a couple of years.
His first hedge fund ran for 20 years, and then his second one 8 years, during which he had very positive returns, but the strategy he used stopped working in 2002 (probably because everyone else jumped on it too).
If you have an algorithmic edge, eventually it will stop working. If it's a really good one, your trades become someone else's edge. The market is constantly changing and active traders are constantly looking at what's going on and trying to take advantage. The more I looked into trading, the more it was just a sea of "Use these charts", "don't really trust these charts", and "once you lose a ton of money, you'll get a feel for things"
You have the market itself which is like the environment, it can go hot or cold based on broad trends, and if that's all their was fundamentals would likely work well.
The problem is there the dumb prey you feed on may adapt and remove your niche you fit in. Even worse is there is no shortage of predators watching you and waiting for you to make a mistake and they'll eat you alive.
He had a sharpe ratio similar to early Rentech and used much less leverage. Probably would have had similar returns to them if if he used similar amounts of leverage. From interviews with him he seems extremely risk averse. Alumni of his fund now run one of the few firms that could be considered a Rentech peer.
No, not full of shit. One of the most well-known investors in the world, worth $1bn, and he wrote papers on sports betting as well.
All of the things he mentions are massive problems with making money from gambling. All of the large gamblers in the US use beards, it is time-consuming and you are generally dealing with gambling addicts who are unreliable. The situation in HK was unique (and the people Benter partnered with proved to be very unreliable anyway when they began making large amounts of money).
You average 1000x returns in a year but you won't reinvest because it would be less fun for the entire two years it would take you to win tens or hundreds of millions.
There's no very specific situation where you're technically getting that money but you can't scale it up, your original statement gave an accurate impression, you're that good but don't want the money.
I don't know if you're lying to us or lying to yourself.
Not asking for your secrets, but is your success a product of intimate knowledge of the game/team/players with you making individually chosen bets or some kind of automated system?
