Summary of Fortune's Formula

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Fortune's Formula book summary


9 Overall

7 Applicability

10 Innovation

9 Style


This is a fascinating book about the sociology of ideas and, specifically, about information theory. Author William Poundstone explores how Claude Shannon, the major developer of information theory, affected finance, investing and gambling. These activities seem disconnected, but they all rely on managing uncertainty. Like any great idea, information theory attracted major personalities: gamblers, mobsters, academics, economists, traders and people who just wanted to make money. The story weaves through a collection of memorable people (from seventeenth-century mathematicians to Ivan Boesky) to present pertinent mathematical and scientific theories, and to explore how people used them. At times, the connections between events seem strained, but they all come together. This book is encyclopedic, exceptionally informative, and packed with great stories and characters. enthusiastically recommends it to anyone seriously interested in investing, the sociology of ideas, or gambling. Indeed, read it twice: once for its theories and practical investment advice, and the other to relish its personalities.

In this summary, you will learn

  • How information theory helped shape modern finance;
  • How it also helped gamblers win at roulette and blackjack; and
  • How one of history’s most successful hedge funds applied mathematical and gambling concepts to investing.

About the Author

William Poundstone is the author of nine nonfiction books, two of which (Labyrinths of Reason and The Recursive Universe) were nominated for the Pulitzer Prize.



Searching for a Sure Thing
In 1956, Claude Shannon worked at AT&T’s Bell Labs in Orange, New Jersey. The Massachusetts Institute of Technology (MIT) aggressively courted him for its faculty because of his work on information theory, the science behind today’s computers, and the field...

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