Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
Edward Thorp: the mathematician
Investors and Entrepreneurs

Edward Thorp: talented financier and mathematician

02.09.2022
2 min read

How Edward Thorp used mathematics to make a profit in the stock market and casinos

The mathematical model of playing the stock market is a rather complicated strategy, which can be followed only by extremely dedicated and attentive traders. One of such is Edward Thorp; he did not just use mathematics to make billions of dollars but also developed such strategies.
Edward Thorp was born in 1932 in Chicago to a family of immigrants from Sweden. The boy had a phenomenal memory, and as early as 5 years old he could solve examples with three-digit numbers. Edward’s family was not wealthy, so from an early age, he worked part-time to save money for college. In addition, to achieve his goal, the boy participated in competitions and excelled in school. Thanks to the superiority in physics in one of the competitions Thorp received a place at the University of California.Edward ThorpAfter graduation, the young man visited a casino for the first time, where he won some money. Then Edward wondered if it was possible to beat the casino, and he approached it on a rather large scale. Edward began to try his hand at different types of games, and over time he developed his own strategy for Black Jack. He kept track of what cards were left in the deck and calculated the possible combinations of them. To facilitate the calculations, Thorp created a small computer that could be carried with him to the casinos. The strategy proved effective, and the young man was able to make good money on the game. However, the casino remained a pastime for Edward, his main job was teaching mathematics at the university.
At the age of 32, Thorp discovered the stock exchange and began to actively study trading. As a result, he created his own strategy for stock trading, which was based on the principles of hedging. Thus Edward made a profit of 25% per annum.
Five years later, Thorp teamed up with a partner to create the investment hedge fund Convertible Hedge Associates. The firm’s initial capital was only $1.4 million. Ten years later, the fund had $28 million under management with an annual return of 18%. This allowed the company to survive several stock market crises without significant losses.
In 1987, the fund was involved in a scandal; its employees were accused of fraud. As a result, the company had to close, but in 1992 Thorp organized a new fund. During its eight years of activity, this project reached an annual profit of 21%.
At the age of 70, Edward turned over the management of the business and concentrated his energies on private investments. The main secret to his success was his mathematical approach to earnings, and it did not let him down.

Tags: Investors and Entrepreneurs
0
Previous Post FIAT: the history of the Italian car manufacturer Next Post Inflation in Switzerland rises for the first time in 10 years

You Might Also Like

Yang Huiyan
Investors and Entrepreneurs
Yang Huiyan is the head of China’s Country Garden Holdings
01.05.2022
Françoise Bettencourt-Meyers
Investors and Entrepreneurs
The richest woman in the world – Françoise Bettencourt-Meyers
16.07.2022
Businessman Parker Conrad
Investors and Entrepreneurs
Parker Conrad and his new startup after the Zenefits failure
10.09.2022
David Sze
Investors and Entrepreneurs
Outstanding venture capital investor David Sze: A professional success story
05.02.2021
Stephen Cohen
Investors and Entrepreneurs
American trader Stephen Cohen: The businessman’s success story
02.12.2021
Ingvar Kamprad
Investors and Entrepreneurs
Ingvar Kamprad: biography of the founder of the famous IKEA store chain
06.04.2021

Recent Posts

  • 1Mary Erdoes
    Mary Erdoes: the most powerful woman on Wall Street
    02.06.2023
  • 2Pilatus Aircraft
    Pilatus Aircraft: the history of the Swiss aircraft manufacturer
    01.06.2023
  • 3investment triangle to select a particular asset
    Investment triangle: how to choose the best asset for investment
    31.05.2023
  • 4Nissan and Renault
    Nissan and Renault invest $600 million in a joint venture
    30.05.2023
  • 5Noventiq
    Noventiq plans to float on the Nasdaq exchange
    29.05.2023

Popular Posts

  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • How Saudi Arabia’s venture capital market is developing

Social media

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Latest Posts

Mary Erdoes
Mary Erdoes: the most powerful woman on Wall Street
02.06.2023
Pilatus Aircraft
Pilatus Aircraft: the history of the Swiss aircraft manufacturer
01.06.2023
investment triangle to select a particular asset
Investment triangle: how to choose the best asset for investment
31.05.2023

Chaslau Koniukh

Expert Chaslau Koniukh

Chaslau Koniukh – an expert in marketing and project management, IT consulting, international investments, investor, financial analyst. A commodity trader, private consultant, entrepreneur, lecturer, author of several articles on the stock market.

Popular Posts

  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Skolkovo analysts: the Russian energy market is suffering losses
  • How Saudi Arabia’s venture capital market is developing
  • Why do we need liquidity and financial stability analysis?
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram
  • Biography

Chaslau Koniukh – an expert in marketing and project management, international investments, financial analyst.

Social media

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics