Edward Oakley Thorp (born August 14, 1932) is an American mathematics professor, and is also a well-known author specializing in math, economics, investment and hedge fund manager. Besides, he is also one of the geniuses of mathematics who devotes his time to researching and finding out how to beat the bookmakers in blackjack by applying statistical probability theory. He pioneered modern applications of probability theory, including exploiting very small correlations to achieve astounding financial benefits.
From an early age, Thorp was famous among friends for his ability to learn quickly and diligently read books. With great efforts on the way to study, it was not difficult for him to get his Ph.D. at the University of California in 1958.
After graduating, he was offered a position as Professor of Mathematics at Massachusetts Institute of Technology (MIT). In his spare time, he often invites friends to the big casinos in Las Vegas to relax and earn more. This is also the starting point for a legendary speculation in the financial market later.
A mathematical genius, he figured out how to beat the bookmakers in blackjack using the theory of statistical probability. After publishing his first book in 1962 on how to count cards and winning the house, he became so popular that several casinos banned him from playing. Many casinos have also had to change the rules of the game so that people using his card count system cannot win and take all their money.
Thorp’s talent continued to shine as he entered the stock market. Still not satisfied with the ultimate success at the casino, Edward Thorp went on to enter the stock market.
It seems that only the pinnacle of the financial market can help him show off his remarkable intelligence. On Wall Street himself, he made hundreds of millions of dollars. Born in 1969, Thorp’s Princeton Newport Partners fund is considered the world’s first quantitative speculative fund (ie using algorithms to automatically trade).
Twenty years have passed without a quarter that his fund has lost money, from an initial $ 1.4 million now to $ 275 million, achieving yields more than double the growth rate of number S&P 500. It can be said that his superior math skills, option pricing and computers gave him a huge advantage over other investors.
Thorp’s work has earned him the title of “godfather” of many of the world’s greatest investors. Warren Buffett, Thorp’s close bridge player, advised the investors of his first hedge fund to switch to Thorp’s fund.