William Poundstone Quotes

There is a deep connection between Bernoulli's dictum and John Kelly's 1956 publication. It turns out that Kelly's prescription can be restated as this simple rule: When faced with a choice of wagers or investments, choose the one with the highest geometric means of outcomes.

Are there any mythical beasts which aren't simple pastiches of nature? Centaurs, minotaurs, unicorns, griffons, chimeras, sphinxes, manticores, and the like don't speak well for the human imagination. None is as novel as a kangaroo or starfish.

Shannon's most radical insight was that meaning was irrelevant.

Expectation is a statistical fiction, like having 2.5 children.

Use "entropy" and you can never lose a debate, von Neumann told Shannon - because no one really knows what "entropy" is.

From Adam Smith through John Maynard Keynes, economics had been mostly talk. At Harvard economics was talk. At MIT, Samuelson made it math.

In real conversations, we are always trying to outguess each other.

Carl Friedrich Gauss, often rated the greatest mathematician of all time, played the market. On a salary of 1,000 thalers a year, Euler left an estate of 170,587 thalers in cash and securities. Nothing is known of Gauss's investment methods.

Your second ducat, like your second million, is never quite as sweet.

The engine driving the Kelly system is the "law of large numbers." In a 1713 treatise on probability, Swiss mathematician Jakob Bernoulli propounded a law that has been misunderstood by gamblers (and investors) ever since.

The assumption that anything true is knowable is the grandfather of paradoxes.

Kelly was aware that there is one type of favorable bet available to everyone; the stock market.

Samuelson spotted a mistake in Bacheliers work. Bachelier's model had failed to consider that stock prices cannot fall below zero.

The ultimate compound return rate is acutely sensitive to fat tails.

The more improbable the message, the less "compressible" it is, and the more bandwidth it requires. This is Shannon's point: the essence is its improbability.