William Poundstone Fortune's Formula

An updated edition of the classic book that introduced the world to the controversial money-making formula known as the Kelly system. In 1956, two Bell Labs scientists discovered the scientific formula for getting rich. One was the 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 the 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. Featuring a new preface and sixty pages of new material, this 20th anniversary edition of William Poundstone's classic book is the definitive account of the betting system that forever changed our understanding of risk-taking.