A Man For All Markets

A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by [Thorp, Edward O.]

A Man For All Markets is Edward O. Thorp’s autobiography. I was looking forward to reading that book I wasn’t disappointed. Even though he is an icon, Edward O. Thorp might not be familiar name, so who is he? Thorp was an absolute intellect that despite his success he managed to stay under the radar. He didn’t subscribed to widely accepted views such as you can’t beat casinos or Wall-Street and he did. The first half of the book is his story. The 2nd half is filled with advice and insights. Plus Nassim Taleb wrote the foreword. So what are some of Thorp’s accomplishments?

  • Thorp figured out how to win at blackjack using card counting. Check. Thorp published the classic book Beat the Dealer. That book launched a revolutions in Vegas. If you like this kind of stuff you will love Bringing Down the House: The Inside Story of Six M.I.T. Students Who Took Vegas for Millions. These MIT guys took Thorp’s strategies and feed it roids.
  • Thorp then built the world’s first wearable computer and used it again to beat the house at roulette. Check. The computer used physics to calculate the momentum of a roulette wheel.
  • Play bridge with Warren Buffett. Check.
  • Thorp discovered what is known today as the Black-Scholes option formula, before Black and Scholes. Check.
  • Discovered that Bernard Madoff was a cheat in 1991. Check. Madoff got busted in 2008.
  • Beat Wall-Street. Check. Then wrote Beat the Market (Out of print, copies are going for $700+). He was the first modern mathematician who successfully used quantitative methods for risk taking.

This is a story of Thorp’s odyssey in science, mathematics, hedge funds, finance and investing. Thorp is not a guy that’s after money or fame. He is a very wealthy man but if he wanted to he could have been extravagantly more wealthy. To preserve his quality of life and to spend more time with his family, he decided not to pursue a number of very profitable business ventures. He like the exploration of ideas. He likes to solve problems. He like mental challenges. That’s what fuels him to beat the dealer and Wall-Street.

Thorp is 85 years and still very sharp. You can listen to him on Masters in Business podcast: Ed Thorp, the Man Who Beat the Dealer and the Market. He reminds me a lot of Buffett and Munger. They might be in their 80s and 90s, but their brain haven’t display any sign of aging.

This is a great book. Read it. Give it. Share it. Enjoy it.

 

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The Story of French – A little bit of background on Quebec

I’m reading this random book, The Story of French by Jean-Benoit Nadeau and Julie Barlow.  First, I should mention that you don’t need to have an interest in the French language to enjoy the book.  It’s a book that somebody gave me to give somebody else and I started to flip through it – And none of them are French. It’s actually very interesting and very well researched. It’s more of a history book and the role of French in shaping it. It’s really by accident that I started reading it. Sometimes randomness brings you the best moment.

Here are some screen shots on the Quebec chapter.

The Story of French Quebec 1 Continue reading “The Story of French – A little bit of background on Quebec”

I am Pilgrim

This is my review of I am Pilgrim by Terry Hayes. This is an excellent book and I highly recommended it. My wife also thinks it’s excellent and she’s the one who recommended it to me. We don’t have the same taste of books, so it’s a surprise, or a rare event I would say, that we both appreciate the same book. If you are looking for some summer reading, you won’t be disappointed with this book.

If you read the back of the dust jacket, you might think that the book is all over the place and it’s not for you. And in a sense, it is all over the place. But it was done on purpose. Usually that’s a recipe for disaster, except in this case. All the crazy events eventually ties up. The story takes you a on a wild ride. There’s two part to the story, which is the reason behind why this is a big book. The book combines both a murder mystery and a terrorist plot to unleash a cataclysm on America. The book takes into a series of strange events. The main character, “Pilgrim”, is a great character. He’s smart and insightful.

There’s a sequel to the book coming out next year, The Year of the Locust, which is coming out sometime next year. I also read some stuff about a movie studio picking the rights to the book/character. So this should be interesting but I don’t know how this story will hold up on the big screen. However Hollywood did make an excellent movie about a baseball stat book, Michael Lewis’ Moneyball. So I’m sure they can figure out something. Terry Hayes is a Hollywood guy and his background is in movie scripts, so maybe he can work his magic. And congrats to Mr. Hayes on his first novel. It must be very different from going to movie scripts to a very long novel.

A Negotiation Win

Here’s an interesting quote from Sam Zell’s book, Am I Being Too Subtle? Straight Talk From a Business Rebel:

My definition of a “win” is not binary. It is not a zero-sum game. Negotiation that leads to a winner and a loser rarely leads to a successful transaction or another one down the road. That’s how it’s been  throughout my business career. Sometimes my team argues with me-they can’t believe we’re leaving money on the table. But I want to create an environment where everyone wants to keep playing. (p. 220)

Zell knew that by making other side happy early on he could get more deals in the future. Everybody stays in the game and everybody keeps playing. Great mottos for anyone in business or investing.

The Forgotten Highlander

the-forgotten-highlander

I just read the The Forgotten Higlander: An Incredible WWII Story of Survival in the Pacific by Alistair Urquhart. Alistair who has died aged 97, was a prisoner of the Japanese from 1942 to 1945, surviving both the infamous ‘Death Railway‘ and the atom bomb dropped on Nagasaki. The fact that he lived until he was 97 is a miracle. Alistair, as a POW, was constantly beaten, tortured, starved, malnourished, dehydrated, forced labor, and was hit with every tropical diseases you can think of (Malaria, cholera etc…). You can say that Mr. Urquhart hit hell’s equivalent of winning the Powerball jackpot. When you though that life couldn’t get worse, hell decided to step it up a couple notch. But Alistair was “lucky”. He survived (or maybe the ones that died were the lucky ones). But Alistair refused to die. He worked on the infamous ‘Death Railway‘, where thousands of British, Australian, Dutch, American and Canadian prisoners would perish in the task. He was put on a Japanese ‘hellship’ that was torpedoed. His book, The Forgotten Highlander, is his memoir. There’s a documentary on Youtube: The luckiest man in World War ll

The sad thing is that the POWs that returned were treated like absolute shit. The British government had insisted all POWs take a vow of silence, but like most veterans of the WWII he initially did not wish to speak about what he had witnessed. Britain said that they needed Japan has an allied against Russia, so they didn’t want to “offend” Japan.

Recently Japan marked the 70th anniversary of the end of World War II. Prime Minister Shinzo Abe reiterated his country’s “profound grief” for the millions killed – but stopped short of offering any new apologies. He was remorseful for his country’s actions in the war, future Japanese generations should not have to keep apologizing.

PM Shinzo Abe said Japan “did inflict immeasurable damage and suffering” on “innocent people.” But he added, “We must not let our children, grandchildren, and even further generations to come, who have nothing to do with that war, be predestined to apologize.” Full transcript.

Almost every Japanese prime minister since 1945 has apologized in some fashion or another. But these apologies seem to have never been deemed sufficient. Why? To be fair, the Japanese people also suffered greatly during WWII. It’s the only nation that took the full massive devastation of atomic bombs — not one, but two. Unfortunately almost all of those who perished in Hiroshima and Nagasaki were civilians.

Japan has committed some of the most horrendous war crimes. It’s not widely discussed and it’s downplayed. In school you are taught that the Japanese bombed Pearl Harbor and the U.S. dropped the bomb. That’s it. The issue is politically sensitive. I mentioned that the allied needed Japan as an ally after the war. That’s part of it. We are constantly reminded of the atrocities Nazi Germany committed. We can’t forget the horror of the Holocaust. We know about concentration camps, we know about Schindler’s List and Anne Frank. But we never talked about the crimes committed by the Empire of Japan. Japan did attacked the U.S., not Germany. What the Japanese did to the Chinese is on par or worse than that the Nazi did, think Nanjing Massacre. (It’s not just Japan, we don’t talk about Stalin’s brutality the same way we talked about Hitler’s.) Maybe it’s a cultural thing. Much of Nazi victims are Europeans with western culture (including European Jews), and Americans identify better with them compared to Chinese and South-East Asians who became the victims of the Japanese. The Japanese war crimes just wasn’t a Western problem, it was far from our eyes. We see the same attitude today towards massacre in Africa. We treat it as  “just another African problem”.

Japan has turned it around since the end of the war. Today Japan is a pacifist country. It’s sophisticated, developed and rich. Their army only participates in humanitarian missions. I’ve been to Japan. It’s a great country with amazing people that has accomplished so much after WWII.

Edge of Eternity

ken-follett-edge-of-eternityI finally got around writing the review for the last book of this trilogy which I finished last month. Edge of Eternity by Ken Follett is the conclusion to a trilogy that covers the 20th century.  This 1,000 page brick covers the event that followed WWII. So it touches the Cold War, JFK, the Berlin Wall, the Vietnam War, the Civil Right movement, up to the fall of the Berlin Wall.

I’m not sure what there’s to say that hasn’t been covered in the first two posts about book #1: Fall of Giants, here, and Winter of the World, here. If you like history but having a hard time reading the stuff out there, these book provides entertainment and knowledge. You follow a bunch of characters/families throughout the major events that happened last century. The 20th century really shaped the way we live our life today, including two World Wars and a technology revolution (communications, TVs, media, airplanes, transportation/cars, Internet etc…)

My favorite was book #1, the one about WWI and the surrounding events. There was a lot I didn’t know about the first World War. The book did an excellent job explaining the complexity of the events leading up to the war. The second book covers WWII and the surround events. This last book covers a lot, from the 1960s to the fall of the Berlin Wall. That’s a lot of stuff and it doesn’t feel like you are reading a 1,000 page book. These books are excellent and might get even better over the years as the 20th century becomes a distant memory.

Winter of the World

winter-of-the-world
I recently finished Winter of the World: Book Two of the Century Trilogy. It took me longer than the first book of the series and I finally got through this 1,000 pages brick. This is book two of the century trilogy. You can read my review of the first book, Fall of Giants, here. The completed work runs more than a 3,000 pages. The Century Trilogy a set of historical novels spanning all the major events that shaped our modern lives today. The length of the book hasn’t doomed it from becoming a bestseller. This is a major accomplishment in the 140 character world.

The first book focus on the events leading to WWI and the Great War itself. The second book, the one I just finished, deals with the events that led up to WWII, the rise of Hitler, and the aftermath.  This is what it’s on the back cover:

Winter of the World follows its five interrelated families—American, German, Russian, English, and Welsh—through a time of enormous social, political, and economic turmoil, beginning with the rise of the Third Reich, through the great dramas of World War II, and into the beginning of the long Cold War.

This is a solid follow up.  Like the first book, it’s a mixture of fictional characters and real events. There are also real characters such as leaders of countries and historically significant people. Ken Follett is known for his deep research and it shows. But I think I liked the first book of the trilogy better so far. My wife, which has read all three books of the series, liked the second one her favorite. Maybe I liked the first better since I learned a lot more. Nevertheless, this is a great story. There’s a lot of drama and historical information. It’s amazing how Follett manage to connect everything together. If you start reading you will get suck it and will consume you for days or weeks.

One fact that people seem to not know is that the German people have voted to put Hitler in power. Why would they do that you might ask? This requires its own post and is a phenomenon that must be studied and remembered so that kind of event doesn’t repeat itself. The short answer is that Germany was going through some brutal times in the 1920s, and the social and economic conditions in place at the time planted the seeds for Adolf Hitler to rise.

If there’s one thing about the book that bugged me, is that there are too many romantic relationships. But I guess most people like that and the series wouldn’t be so popular without it. It’s just not my thing. But the romantic relationships are important since you need the next generation for the next book. Another thing: This is a book on World War II and there’s not much on Japan. Except for Pearl Harbor and the atomic bombing, Japan is pretty much left out. Japan is in the book since you can’t ignore it but it’s overlooked. I feel that’s the general feeling when people think of WWII, it’s very Eurocentric even though it’s a “world” war. We are remembered of the genocide in Europe but we never talk about what the Japanese did to the Chinese.

I’m looking forward to finishing this trilogy with the third volume of the series, Edge of Eternity. You can read an excerpt of the third book edge_of_eternity_chapter1. If you want to learn more about history but you find it boring, this series is a great way to learn more in an entertaining way.

Behind Every Great Man

failure-is-not-an-optionNASA Flight Director Gene Kranz wrote,

“Behind every great man is a woman – and behind her is the plumber, the electrician, the Maytag repairman, and one or more sick kids. And the car needs to go into the shop.”

From: Failure Is Not an Option: Mission Control From Mercury to Apollo 13 and Beyond by Gene Kranz.

 

Veil: The Secret Wars of the CIA

VeilI just finished Veil: The Secret Wars of the CIA, 1981-1987 by Bob Woodward. I respect Bob Woodward. I think he’s one of the best investigative journalist out there. His body of work is impressive and he has been working for the Washington Post since 1971. Woodward with Carl Bernstein did much of the  news reporting on the Watergate scandal that led to numerous government investigations and the eventual resignation of President Richard Nixon. You can read about the Watergate scandal in All the President’s Men by Woodward and Bernstein.

Why did I read this book? It wasn’t on my list of things to read and I felt like I needed something “light” for the summer. I also have this box of spy books that was given to me that I want to get through. Well this book is anything but light. It’s a very detailed well researched book. It’s a good book but I think you need to be a little crazy to put yourself through it. You must love history and lots of tiny details about everything. It’s insane the level of research Woodward puts himself through. Using hundreds of inside sources and secret documents, Woodward has pieced together an unparalleled account of the CIA, its Director, and the United States government.

As the title suggest, it’s a book about the CIA during President Reagan’s years.  The book covers the the directorship of William J. Casey from 1981-1987. The 70s was a tough time for the CIA. The agency was plagued with scandals and the massive intelligence failure of Iran. The CIA failed to foresaw the overthrow of the Shah who was supported by the U.S. This also resulted in the Iran hostage crisis. When Reagan/Casey took over, morale was low and the agency was a mess. Casey was an Office of Strategic Services (OSS) veteran— the predecessor to the CIA. He wanted to reform the CIA and he wanted the agency to get its respect back. Casey saw himself as an old OSS operator and had a sentimental about intelligence work.

The book is mostly about the covert wars that the U.S. conducted during the Reagan years. The U.S. was afraid of another Vietnam disaster so it was very careful on how it conducted its foreign policy. The book is 50% Nicaragua, 25% Libya, and the rest is Iran and other countries. Somehow, the Soviet-Union and Cuba is tied in all of this. One thing I didn’t realized is how insane Muammar Gaddafi was. I knew he was a bad guy but he definitely had some loose screws in his head. He supported terrorism activity and several violent organization. His personal behavior and personality fueled was not one of a reasonable man or leader. Nobody liked the guy and he was very unpredictable. The U.S. bombed Libya in 1986 but never got Gaddafi out of power. Nicaragua was the main topic of the book. The leftist Sandinista overthrew the Somoza dynasty in 1979. The U.S. didn’t want a model leftist state to exist so he backed the Contras. The CIA was afraid that the revolutionary fires could sweep north, especially to Mexico were the social conditions for breeding socialism was in place.

There’s a lot to debate on what is the role of the CIA? Is it just a intelligence gathering agency for the President or does it take a more hand-off approach with operations? The CIA did intelligence, but is it supposed to kill people also? During Casey’s tenure, the CIA to directly and covertly influence the internal and foreign affairs of countries relevant to American policy. It acted as a shadow secretary of state. With money, secrets, and direct access to the President you have a lot of power. Under Casey, the CIA had become a tool bent on forcing its view on the world.

It’s possible that the CIA’s influence was too great. The CIA apparatus had been used as a policy-planning service for Casey and finally  it had become an implementing agency through its own operations or through the White House. This is how you got the Iran-Contra affair scandal. The whole thing is huge complicated mess. The U.S. selling arms to their arch enemy Iran (a couple years after the hostage crisis) and funneling the profits to the Contras. The details of that scandal is beyond this post. Six people were charged but were later pardon by President Bush.  One of them, Olivier North, became a on-air personality for Fox News.

If you really wanted to know what’s was going on behind the scene during the Reagan administration, this book will fulfill that request. The Reagan administration displayed a certain image in public, an image that people are still attached too today. However the behind the scene stuff is the exact opposite of that image the administration cultivated. I understand why. There are so many factors and people involved in the decision making process that it’s an absolute mess. Good book but not your relaxing summer reading.

Common Stocks and Uncommon Profits

Common Stocks and Uncommon Profits by Phil FisherI reread the classic Common Stocks and Uncommon Profits by Philip A. Fisher. The original edition was published in 1958 and is still as relevant today. The book is ranked up there among the best investment book of all-time. It’s worth picking up once in a while to reread certain sections. I have the updated edition, which includes the perspectives of the author’s son Ken Fisher, a respected investment guru in his own right. You can find some of Ken’s writing at Forbes and books at Amazon.

It’s not a big book but you can’t slam it. There’s a lot of material to digest, although pretty straightforward. Phil Fisher well-known for having a major influence on Warren Buffett’s investment style. Buffett went from Graham’s “cigar butt” approach (dirt cheap companies with one more puff in them) to pay up for quality and hold it forever. Warren Buffett once said his investment philosophy was 85% Ben Graham, 15% Phil Fisher. Today if you look at Buffett’s past investments I think he’s more Phil Fisher than Graham. Fisher was all about companies that could grow, grow and grow. Phil Fisher’s strategy was to buy well-managed, high-quality growth companies, which he held for the long term.  This is not a message to go out and buy growth at any cost. His philosophy calls for making a relatively small number of investments but only in unusually promising companies. He’s looking for signs of growth potential in the companies he’s studying. The book provides a fifteen points guide on what to look for in buying a common stock. Fisher is also an advocate of the scuttlebutt method.  The scuttlebutt method is when researching for investments you need to go beyond the annual report and talk management, employees, former employees, customers, supplier, the competition and more. It’s a lot of work but that’s one way of finding outstanding investments opportunities. The book also provides a list of “what not to do” such as don’t invest in a promotional company instead of “what to do”. If you can avoid pitfalls and mistakes you are already ahead of the game. Remember that the key is no to lose any money.

I won’t go into details about the book since there’s plenty of resources available online. However I will provide this golden nugget of knowledge, which I think summarizes the book: “What are you doing that your competitions aren’t doing yet?” This question is a home-run to me. It’s a powerful question. The company or individual that’s always asking itself that question never becomes complacent.