Fortunes Formula
  • Can anyone explain what this is,in laymans terms.
    I ws at a party tonite and when someone overheard me saying I'd just come back from Vegas they pigeon-holed me and went into an extended speil on this subject.
    Twenty minutes later I know that-1)evidently it is the key to life,happiness,success and so forth,2) anyone who wishes for the #1 must follow it,and 3) its the hot new book with the Wall Street/ Dan Brown contingent.
    Other then that it works in both casinos and hedge funds,I couldn't follow his explanation whatsover.
    He assumed I knew the basics and I didn't feel like prolonging the conversation.
    Anything to it?
  • NYB - I just heard about it Tuesday morning from a friend at a local casino, and ordered it Tuesday afternoon, so I can't give a first hand report yet; but my friend said it was a good read. It is about the Kelly Criterion and how it relates to gambling, stock market, etc.

    There are some excellent reviews on it at amazon.com it you want to check them out, and this one pretty well sums it up......"Fortune's Formula is a fascinating story, and I would expect that anyone with an interest in gambling, applied mathematics, or finance ought to read this book....Fortune's Formula is the story of the principle from information theory known as the Kelly Criterion and it's applications in gambling and especially finance."

    Regards.....Grifter
  • One of the interesting aspects about this book I have not read... I presume that the square of the SD (variance) is the key to when to leave the investment (21 game).

    We Blackjack players should think of this point as the Gambler's share... about 1.3x initial investment for Basic Strategy decisions using advantage based betting ramps.

    Of course using Advantage decisions such as splitting 10's vs. 5,6 or DD A8 vs. 5, etc., and selective sessions (Wonging) will alter the variance and thus the EXIT point.

    Two words: Financial Management.
    Five more words: Quit Point and Stop Loss.

    I think we're gonna have fun with this.
  • Didn't understand a word. Maybe try it in Spanish.
  • Words like "Quit Point" seem like fighting words to some on this forum.
  • Basically there's a risk associated to playing BlackJack, and an uncertainty. At some point the risk and uncertainty outweigh continuing the session.

    Variance is the word used to describe risk and uncertainty. We can say that blackjack varies due to risk of betting double or splitting pairs, and there is a risk in so doing. For those of us that use Advantage play, there is a certainty to betting 3 units as opposed to 1 unit because the Player is favored. But yet, there is still an amount of risk and uncertainty. At some point, the risks and uncertainty will out weigh the financial gains... like when the House has the advantage.

    Nonetheless, its this variance that in "nearly even situations" causes a player just playing basic strategy with a flat bet, to be ahead of the game, even though the House is favored.
  • nyb:

    Yeah, it might be. But the stock market is also about risks and uncertainty, and one is supposed to have a goal, and an "Exit strategy", and know where the "next best thing" is. Not to mention protection of gains by hedging (usually options investments). If the writers are serious about their works, then some of it will not apply to 21. Primarily due to the manipulations of quitting a winner in a game with a house edge. Quit when 4 units ahead so to speak, or quit when 5 units behind, or both. Statistically, that doesn't wash as its all one big war with many battles fought. Over time the house will trend towards retaining its advantage.

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