“If you’re so smart, why are you so poor”: Mathematician Edward Thorpe beat a casino and made $800 million on Wall Street

Edward Thorpe is a legend whose name is known even to those who do not understand casinos, hedge funds and just financial sector. The naturally gifted mathematician made many mistakes, but always found solutions. His thirst for knowledge and solving real-world problems has determined Edward’s path, and by the age of 89, he had a fortune estimated at around $800 million.

Scientific start

Edward Thorpe was born in 1932 in Chicago. Despite the fact that his father was a military man, the boy had no predisposition to follow in his footsteps. From an early age Edward was interested in science. He quickly learned arithmetic, and his curiosity motivated him to study everything he saw around him.

A keen interest in practical classes in radio engineering and electronics at Lomita High School, where the family moved at the start of the Second World War, shaped the young man’s direction. He identified his own approaches to learning, which yielded positive results. Thorpe acquired his knowledge through independent experiments, pranks, games and other activities that were primarily fun.

Roulette, blackjack, baccarat

As a senior in high school, Edward became interested in roulette. Thoughts of how you can predict the outcome of the game, he did not have a passion for gambling. Moreover, Thorpe viewed the process from a physical point of view, comparing roulette to a planet orbiting.

Edward returns to finding answers to a number of fascinating questions while teaching mathematics at MIT. As part of his educational work, he identifies how to win at roulette.

Thorpe develops a winning strategy together with Professor Claude Shannon. They managed to create a portable computer capable of determining where the ball would fall. However, the device had to be abandoned in the end, as it was flawed and could fail during the game.

Thorpe’s next hobby becomes finding a solution to win at blackjack and doing so systematically. Despite the fact that millions of card combinations need to be worked out in order to calculate profitable patterns, Edward does take up the challenge of solving the puzzle. The fruit of his long and gruelling labours turns out to be the strategy of counting tens.

After dealing with roulette and blackjack, Thorpe finds a new target – baccarat. Baccarat is another famous card game, which can bring in some decent cash winnings. Edward teams up with Bill Walden, who works in the field of mathematics, and develops a strategy for counting cards.

Edward and his colleagues tested all their developments in practice. They managed to “rob” more than one casino. However, all these ventures had to stop eventually. The casino owners did not like big winnings and successful calculations. Several times it came to a life-threatening situation.

Post-gambling activities

After getting the answers in the gambling part, Edward Thorpe decides to get involved in the bigger game – the global financial market. Using the same approach as before – a desire to understand the system and understand how to get a particular result through science, Thorpe makes progress and finds himself on Wall Street.

In his financial activities the man has been involved in investments, hedge funds and warrants. Edward recounts all his achievements in his books, all of which have become bestsellers.