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

William Poundstone

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William Poundstone
Age: 69
Born: 1955
Born: March 29
Author
Biographer
Journalist
Cannot
Stock
Work
Zero
Failed
Model
Models
Consider
Mistake
Spotted
Fall
Prices

More quotes by William Poundstone

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The best paradoxes raise questions about what kinds of contradictions can occur-what species of impossibilities are possible.
William Poundstone
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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.
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There were many at Bell Labs and MIT who compared Shannon's insight to Einstein's. Others found that comparison unfair - unfair to Shannon.
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People tend to be clueless about prices. Contrary to economic theory, we don't really decide between A and B by consulting our invisible price tags and purchasing the one that yields the higher utility, he says. We make do with guesstimates and a vague recollection of what things are “supposed to cost.”
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Expectation is a statistical fiction, like having 2.5 children.
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Kelly was aware that there is one type of favorable bet available to everyone the stock market.
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Samuelson, however, hedged his personal bets - by putting some of his own money in Berkshire Hathaway.
William Poundstone
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A bit is worth 10,000 basis points.
William Poundstone
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At a bare minimum, understanding entails being able to detect an internal contradiction: a paradox.
William Poundstone
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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.
William Poundstone
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Bernoulli's real contribution was to coin a word. The word has been translated into English as utility. It describes this subjective value people place on money.
William Poundstone
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In The Tricky Art of Co-Existing, Sandi Toksvig navigates life's little dilemmas with wit and not-so-common sense. You'll learn the strange history of common courtesy and the one true secret of social success: how to not drive everyone around you crazy.
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Average isn't so hot at the race track given those steep track takes. Average is pretty decent for stocks, something like 6 percent above the inflation rate. For a buy-and -hold investor, commissions and taxes are small.
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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.
William Poundstone
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The assumption that anything true is knowable is the grandfather of paradoxes.
William Poundstone
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Shannon's most radical insight was that meaning was irrelevant.
William Poundstone
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Use entropy and you can never lose a debate, von Neumann told Shannon - because no one really knows what entropy is.
William Poundstone
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The story of the Kelly system is a story of secrets - or if you prefer, a story of entropy.
William Poundstone
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The ultimate compound return rate is acutely sensitive to fat tails.
William Poundstone
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The best strategy is one that offers the highest compound return consistent with no risk of going broke.
William Poundstone