Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street Paperback – Illustrated, 19 Sept. 2006

this book gives the best explaination on kelly formula - fact. apart from that it's a in depth story on investment theory and card counting in vegas to name a few wonders of this book... i give this book 5 stars because the explanation of kelly formula wont send you to sleep, and the rest of the book is well written and insightful. i feel that it's easy to learn something from this book while being a good read...

Anyone interested in investments, from betting on horses to Casinos to Stock Markets this gives a history of the principles. Explaining the odds and theories still applied today by the most sophisticated Wall Street Quants.Not a dry lecture with misleading equations that no one understands but a readable history that explains how you should invest. No one knows what the stock markets will do next but you can have an edge if you take a systematic approach.

This book feels like it is written by a very enthusiastic lecturer giving a series of public lectures. As a result, some of the discussion on the mathematics used is quite light but the book is highly enjoyable as it is part biography, part mathematics, part history of gambling. Personally, if I had been the editor then parts of the mob story would have been cut and bit more on Kelly and Shannon and with some of the maths beefed up but even if this was the case you would still need to dip into a book on information theory so maybe the editor and author know more than me (and judging by the five star reviews they do!).

Very good book in the mold of Taleb and his series on probability. The writer tells some great stories to explain some quite profound insights. Well worth the read as gambling has some strong links to investing in general (in a good way that is).

Other reviewers have remarked on how entertaining this book is; those who have read some of Poundstone's other works will find this no surprise. There are some wonderful anecdotes and insights here, with hard-ish science mixed in nice pen-portraits of the main protagonists.However, having an interest in sports betting and investment, I also found the book very helpful in explaining the benefits and potential pitfalls of the Kelly approach (as Poundstone mentions, there is still antipathy towards the approach among some gambling experts who really should know better). In particular, he takes pains to explain why Kelly succeeds over both level staking and Martingale systems, and how volatility can be controlled through reduction in Kelly proportions and also diversification. I have benefited personally for these and other insights in the book, which I can thoroughly recommend.

William Poundstone, for my money, is the best science writer operating today. If you can bear Malcolm Gladwell, you'll appreciate the quality when you make the switch to Poundstone. And he rarely does that sketch portrait schtick about the bearded researcher in the Hawaian shirt at an untidy desk in a cramped office on a leafy campus either, thanks.This book, I'm sorry to say, is not his best. In fact it's two books. One is about how to beat the system, by fair ways or mostly foul. Hence the crime stories. The second book is an examination of Efficient Market Theory. EFT is the notion that since all public information is already in the price, you can't beat the stock market.You can see why the two stories overlap. But they are, or should be, separate.Beating the stock market is, however, what some people routinely do. And anyone who has owned shares has already been baffled how share prices can ignore great events but yo-yo on trivialities. From Bachelier to Samuelson, EFT has ignored these obvious problems. But it's very difficult to confound EFT, because you have to design a scientific way of beating the market. The Kelly system got most of the way to being scientific. Ah, but science is replicable. And once there are more than a few Kelly betters in the market the scientific advantage disappears.Many of the great names, from Bernoulli (utility) to Shannon (information) get name checks here, useful if you're going to interview with an investment bank. I'd give the book 4 stars if it was by anyone else, and I really don't quarrel with previous critics who've given it five. It's just that I have got used to having very high expectations of this author.Try Against the Gods: The Remarkable Story of Risk or A Random Walk Down Wall Street: A Time-Tested Strategy for Successful Investing instead or - alright - as well on this subject. And anything else by Poundstone if you have any curiosity about anything.

You shouldn't be allowed to manage money unless you can demonstrate a good understanding of how much money you should be betting. The 'secret' is something called the Kelly criteria. This book manages to be an entertaining but also incredibly instructive book about the history of links between gambling and the financial markets.

Easy going and interesting book about development and use of Kelly criteria in stock trading and gambling.