Quote Originally Posted by Dbs6582 View Post
Don, yes I am aware of this. I am very aware that Ed Thorp is worth a lot, and he made most his money running hedge funds on Wall Street. And yes, I understanding leveraged trading contributed to Thorp’s success. What I’m calling into question is a different point. Did all this have anything to do with bj or his experience in casinos? Many people made/make this type of money on Wall Street and they didn’t play bj or know the math behind bj. I think it’s kind of silly to attribute Thorp’s success on Wall Street to bj.

All math in the stock market is based on using the past to predict the future. Most of the time this works since our markets are some of the most stable in the world. But when an unforeseen even happens, this math breaks down. Are you aware of what happened at Lehman Brothers? Their complicated math models broke down due to an unpredictable event, the housing bubble and crash.

Since what Ed Thorp did occurred over the short run, he succeeded. This happens with gamblers too. We don’t know what would have happened with Throp’s strategy in the long run. I expect the same thing that happened to Lehman’s Brothers, since no one can predict the future no matter how good their math is. What we’re in essence talking about is using math to predict the future in stocks, since the data that will be used is alway from the past. One of the first things most investors learn is that “the past does not predict the future”.

I just found a quote from Ed Thorp on what happened to him in 2008. He said: “At 2008, I didn’t have any place to hide”. He lost a significant amount during this time and he said he still hasn’t fully recovered from that. It appears his great math model failed him during this time.

Don't worry Don, many of my big time Wall Street friend don’t understand this either. They also disagreed with me, but they were more polite in their disagreement. When someone has had success doing something in the short run, they start thinking the’ve figured it out. The good news for our Wall Street buddies is when they mess up (which inevitably happens) we know our government will bail them out. That’s what happened during that last financial crises 10 years ago. If it wasn’t for our government bailing them out, many big banks and financial institutions would have gone under, doing pretty much what Ed Thorp was doing. So the big guys win, and us little tax payers lose, even when the big guys are wrong. I don’t agree with that, but that’s part of our system.

Btw, did you know one of Ed Thorp’s hedge funds was shut down due to being embroiled in the junk bond schemes from Michael Milken? Just because someone made a lot of money doesn’t mean they made it an ethical way. A person’s net worth does not indicate his intelligence. Think about that for a while.

One last comment. Did you know Ed Thorp has paid to have his body cryogenic frozen when he dies so he can be brought back to life in the future when our technology is further ahead. I’m not making this up. Look it up. Ed Thorp has actually given the odds that he will be brought back to life at 2%. Do you think this is smart too? You may since Ed Thorp is worth $800 million. That appears to be your measuring stick for how you determine if someone is smart. If they are wealthy, then you believe they must be smart. Btw, I give the odds of Ed Thorp being brought back to life at 0%.
I'm going to be very polite this time. I have been a friend of Ed Thorp for well over 30 years. There is NOTHING in his background that you can teach me about him. Princeton-Newport and Oakley-Sutton were clients of Morgan Stanley, and we dealt with them on a daily basis. His partner in NJ, Jay Regan, was the wrongdoer; Thorp had no knowledge of what was going on.

As for his hedge fund results being short term, you obviously have no knowledge of how long he ran/has been running the fund. It isn't what any rational person would call "short-term."

Finally, Ed Thorp is one of the all-time great minds of the 20th/21st centuries. He figured out some of the most important principles of both blackjack and the financial markets long before anyone else did -- a true visionary.

You may write back anything you wish, but I won't be responding any further. Given the below, please don't try to dazzle me with your knowledge of these subjects.

Don

Donald Schlesinger is the President of Demand Derivatives Corp.Prior to the merging of the individual product companies under the DDC corporate umbrella, he was instrumental in directing the companies separately.
Donald Schlesinger was the Vice Chairman and Chief Strategy Officer of The VolX Group Corporation and RealDay Options Corporation — after a period of semi-retirement. Before this he was an Executive Director in Morgan Stanley Dean Witter’s Worldwide Equity Derivatives department. As the Director of Derivatives Education and Training, some of Don’s responsibilities included the creation, supervision, and delivery of in-house programs, as well as educational seminars for clients. In 1993, Don helped establish and perfect risk-management techniques and systems for global equity derivatives traders at the firm. Schlesinger was a member of the Institutional Equity Division’s derivatives risk-management committee and served as a liaison between that unit and the firm’s head of global risk management.
Prior to assuming these roles, he was a Proprietary Trader and Options Strategist at Morgan Stanley, from 1984 to 1994, where he managed the firm’s domestic over-the-counter options book and priced structured products for clients. Schlesinger has lectured extensively on options theory and hedging techniques, having participated in many industry-sponsored events, and has written numerous published papers and articles on options strategies. Among them are: “Options Alphabet Soup,” “Looking Askew at Volatility,” “Hedging First- and Second-Order Sensitivities of Options” (“Learning Curve” article in Derivatives Week), “Volatility Cones Come in Many Flavors” (co-authored with Robert Krause, for Futures Magazine), “Hedging Imperfect Baskets” (co-authored with Robert Krause, for Derivatives Strategy magazine), and “Volatility Trading: RealVol futures Jump into the Mix” (co-authored with Robert Krause, for Swiss Derivatives Review).
In 1996, Don was part of the third-place “All-America Research Team,” named by Institutional Investor, which commented: “The group’s ‘top notch’ educational seminars, under the direction of Donald Schlesinger, demystify derivatives, according to a participant.” In 1991–92, Schlesinger was the featured speaker in over 100 presentations of Morgan Stanley’s PERCS product to institutional clients in the U.S. and Europe.
Since leaving the firm, Don has continued to lecture at Morgan Stanley, and has also done training and presentations for Goldman Sachs, Lehman Brothers, Deutsche Bank, Credit Suisse First Boston, the Options Industry Council, and Electronic Trading Group.
As a former teacher in the New York City school system, Schlesinger taught high school-level mathematics and French for 16 years. He holds Master of Philosophy and M.A. degrees in French from the City University of New York, and a B.S. in mathematics, cum laude, from The City College of New York.