Top 26 Quotes & Sayings by William Poundstone

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.

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

At a bare minimum, understanding entails being able to detect an internal contradiction: a paradox.

Samuelson, however, hedged his personal bets - by putting some of his own money in Berkshire Hathaway.

The best paradoxes raise questions about what kinds of contradictions can occur-what species of impossibilities are possible.

The assumption that anything true is knowable is the grandfather of paradoxes.

In real conversations, we are always trying to outguess each other.

Kelly was aware that there is one type of favorable bet available to everyone; the stock market.

A bit is worth 10,000 basis points.

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.

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.

Your second ducat, like your second million, is never quite as sweet.

The best strategy is one that offers the highest compound return consistent with no risk of going broke.

"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.

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.

There were many at Bell Labs and MIT who compared Shannon's insight to Einstein's. Others found that comparison unfair - unfair to Shannon.

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.

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

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.

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.

Shannon's most radical insight was that meaning was irrelevant.

Use "entropy" and you can never lose a debate, von Neumann told Shannon - because no one really knows what "entropy" is.

The story of the Kelly system is a story of secrets - or if you prefer, a story of entropy.

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.”

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.

Expectation is a statistical fiction, like having 2.5 children.