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

William Poundstone

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William Poundstone
Age: 69
Born: 1955
Born: March 29
Author
Biographer
Journalist
Compound
Compounds
Tails
Fats
Sensitive
Rate
Ultimate
Return
Acutely

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In real conversations, we are always trying to outguess each other.
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The best strategy is one that offers the highest compound return consistent with no risk of going broke.
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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.
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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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A bit is worth 10,000 basis points.
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The best paradoxes raise questions about what kinds of contradictions can occur-what species of impossibilities are possible.
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The assumption that anything true is knowable is the grandfather of paradoxes.
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Your second ducat, like your second million, is never quite as sweet.
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The story of the Kelly system is a story of secrets - or if you prefer, a story of entropy.
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Expectation is a statistical fiction, like having 2.5 children.
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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.
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At a bare minimum, understanding entails being able to detect an internal contradiction: a paradox.
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Paradox is thus a much deeper and universal concept than the ancients would have dreamed. Rather than an oddity, it is a mainstay of the philosophy of science.
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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.
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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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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.
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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.
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Shannon's most radical insight was that meaning was irrelevant.
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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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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.
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