A Man for All Markets by Edward O. Thorpe is a fascinating memoir from the mathematician/gambler/investor who solved card counting and essentially invented modern quantitative investing strategies.
While reading, I was struck by two things: One, unsurprisingly, Thorpe is/was curious, industrious, and clearly a genius. Two, that his life as a latchkey kid in the early 20th century, which included buying dangerous chemicals and making amateur explosives at home could not seem more distant than the modern American screen-based and scheduled childhood.
A few standout passages:
Regarding the need to have both a desired outcome and an expected outcome in mind when making a new decision:
If you do this, what do you want to happen?
If you do this, what do you think will happen?
The problem of moral hazard in the modern US economy:
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.
On negotiating to “win”:
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.
The information food chain:
Be aware that information flows down a ‘food chain’, with those who get it first ‘eating’ and those who get it late being eaten.
Regulation matters, but only when simple and effective and not crafted by the schmucks making all the bad choices:
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.
How much leverage is enough?
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.
The gambler’s approach to life:
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.
And finally, what old people always say but young people can’t seem to internalize:
That acknowledgment, applause, and honor are welcome and add zest to life but they are not ends to be pursued. I felt then as I do now that what matters is what you do and how you do it, the quality of the time you spend, and the people you share it with.