Ep. 254: William Poundstone Interview with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
Michael Covel
4.6 • 732 Ratings
🗓️ 6 July 2014
⏱️ 37 minutes
🧾️ Download transcript
Summary
My guest today is William Poundstone, an American author, columnist, and skeptic. He has written a number of books including the Big Secrets series and a biography of Carl Sagan.
The topic is his book Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street.
In this episode of Trend Following Radio we discuss:
- Claude Shannon
- The connection between Al Capone
- The Kelly formula, bookmaking, and the telephone industry
- Bell Labs and information theory
- Why, when betting, if there's a small chance of losing everything, you will eventually lose everything
- Criticisms of the Kelly criterion
- Ed Thorp, blackjack, and card counting
- Long-Term Capital Management
- Martingale vs. Kelly
- Early development of the Black-Scholes formula
Jump in!
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I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.
To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/
You can watch a free video here: https://www.trendfollowing.com/video/
Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast
My social media platforms:
Twitter: @covel
Facebook: @trendfollowing
LinkedIn: @covel
Instagram: @mikecovel
Hope you enjoy my never-ending podcast conversation!
Transcript
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| 0:00.0 | This is Trend Following Radio, where great thinking comes alive. |
| 0:10.9 | Nobel Prize winners, legendary traders, bestselling authors, and the pros that know what drive us irrational human beings. |
| 0:21.2 | I am your host, Michael Covel. |
| 0:24.0 | Not filtered, raw, honest. |
| 0:27.3 | That's my passion. |
| 0:32.8 | On the show today is William Poundstone. |
| 0:35.4 | William is the author of Fortune's Formula. |
| 0:38.4 | You must read this book, period. |
| 0:41.0 | It's about the Kelly criteria. |
| 0:43.7 | This is risk management, money management at its heart. |
| 0:48.8 | All great trend following traders have had to deal with Kelly. |
| 0:53.6 | If they've had to deal with it, you have to deal with it. |
| 0:58.0 | Bill's really had a wild ride with this story. |
| 1:01.1 | I would love to talk to him all day long to figure out how he figured out all this. |
| 1:05.8 | Fantastic insights. |
| 1:07.3 | I hope you enjoy. |
| 1:18.3 | You know, I have to say, and I reread it, |
| 1:22.4 | fortune's formula in the last 24, 48 hours, |
| 1:27.0 | the thread that you had to weave for that book, |
| 1:29.4 | that must have been terribly fun. |
| 1:31.1 | I mean, how did you get this gig? |
| 1:36.0 | I went to MIT, and there I heard all these almost urban legends about Claude Shannon. |
... |
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