Ed Thorp on How to Think for Yourself, How to Be Inner-Directed, and The Dangers of Investing Fads

In this second conversation with Tim Ferriss, Ed Thorp explores the value of long-term thinking versus the cost of short-term focus, using real estate and compounding examples. He makes the case for basic numeracy, statistics, and mental math as tools for thinking independently rather than relying on crowds or experts. Thorp surveys the changed hedge fund landscape, explaining who should and shouldn't invest in them today. He then shares his personal systems for health and longevity, including weight tracking, risk avoidance, and turning idle moments into 'scrap time.' At 89, he closes on personality typology, inner-directedness, and thinking about society as 'us' rather than 'me.'

• Thorp's first market edge came from spotting that common stock warrants with only a couple of years left were vastly overpriced because holders ignored short-term time decay.
  00:01:01
• Explains the power of compounding: at 10% annual growth, money roughly doubles every seven-plus years, becoming about a 16,000x multiple over a century.
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• His hedge fund (the fund within Citadel) returned 20%+ annualized net of fees for the first ~17 years, but rising taxes and lower returns later made the stock market a better choice for him personally.
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• Argues that hedge funds as a whole, treated like a cap-weighted index, are no longer an attractive asset class; only wealthy tax-exempt investors and exceptional funds should participate.
  00:35:06
• Frames health and fitness as primarily about avoiding what you miss; preventative screenings like colonoscopies and skin checks matter more than aerobic fitness alone.
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• Recounts Milton Friedman refusing to cross against a red light: 'Why should I risk the rest of my life to save 20 seconds?' as a model for everyday risk avoidance.
  00:54:30
• Key takeaway from The Lonely Crowd: 'other-directed' people who take cues from the crowd are adrift without an inner compass, and are lonelier for it.
  01:08:28
• Marathon running taught him to think long-term about life, pacing himself and planning ahead to avoid problems that derail others.
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• Recommends Schaum's Outline of Statistics as a practical, formula-light way to learn elementary statistics.
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• You can mentally calculate the day of the week for any date; July 4, 1776 was a Thursday, the skill featured in Rain Man.
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• Mental math trick: to multiply a two-digit number by 11, add the digits and put the sum in the middle (34 x 11 = 374).
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• Thorp keeps his weight bracketed between 151 and 158 pounds and adjusts eating when he nears the top of the range.
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• He reversed osteopenia into excess bone over several years using bone supplements like calcium, magnesium, and K2.
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• He only took up beer around age 85 after visiting the Guinness Brewery in Ireland.
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• At 89 the COVID death rate for his age group is near 20%, which is why he avoids crowds and commercial travel.
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• Driving risk per mile is roughly 100 times that of flying, so he favors nonstop flights to minimize takeoffs and landings.
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• He ran an 'age guessing' experiment, paying ~20 strangers $5 to guess his age within five years for fun.
  01:00:11
• Thorp credits finasteride (Propecia/Proscar), taken for ~20 years for prostate health, with also promoting and retaining his hair.
  01:11:05

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