#604: Master Investor Ed Thorp on How to Think for Yourself, Mental Models for the Second Half of Life, How to Be Inner-Directed, How Basic Numeracy Is a Superpower, and The Dangers of Investing Fads

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Jun 28, 2022

Edward O. Thorp, an acclaimed author and legendary blackjack player, dives into his investment philosophy honed over decades. He emphasizes the power of basic numeracy as a superpower for informed decision-making. Thorp shares insights on navigating long-term investments and the importance of self-awareness in leadership. He warns against blindly following fads and highlights how understanding market psychology can lead to better outcomes. Plus, the conversation includes practical strategies for maintaining both mental and physical health.

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ADVICE

Short-Term Thinking in Investing

Consider short-term implications of investments, like expiring warrants.
These can be overpriced relative to their long-term value, creating opportunities.

ANECDOTE

Real Estate and Opportunity Cost

Ed Thorp's friend lost millions by waiting 10 years to sell his house for a slightly higher price.
He missed out on potential stock market gains due to short-term thinking.

INSIGHT

The Importance of Numeracy

Numeracy, including statistics and probability, is crucial for understanding data.
Many educated people lack these skills, leading to misinterpretations.

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