In the wider value investing circle, Ed Thorp doesn’t enjoy as much fame as Warren Buffett or Peter Lynch, but he is held in awe by traders as a polymath, mathematician, and an extraordinary hedge fund manager.
Thorp’s fund, from 1969 to 1988, posted an annual compound return of 19.1% before fees, and 15.1% after fees. Not only was Thorp’s return higher than S&P 500’s annual return of 10.2%, but was much less volatile. For the 230 months that the Fund was in operation, it had only three losing months and that too only an under 1% loss.
Unlike most money managers, Thorp began his career as an academic mathematician, but his story is one man’s quest for understanding the world through scientific thinking, problem solving and playing games modeled through probabilities.
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