Books like Fortune's Formula by William Poundstone

Name: Fortune's Formula
Rating: 4.333333333333 (6 reviews)
Author: William Poundstone

📘 Fortune's Formula by William Poundstone

Fortune's Formula explores the Kelly criterion, first devised in 1956 by John Kelly Jr. and Claude Shannon for information theory and soon adapted for gambling and investing. The book details how the formula determines the optimal bet size once an edge is known, and it examines the trade‑off between risk and growth. It warns that betting the full Kelly can cause large account swings, while using a half‑Kelly reduces volatility by roughly 90% but also slows growth by about 25% after many trades. Illustrations from professional gamblers and hedge fund managers illustrate the real‑world application of Kelly’s strategy to casinos and financial markets.

First publish date: 2005

Genre: History/Modern History

Authors: William Poundstone

★ ★ ★ ★ ★ 4.3 (6 community ratings)

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