Hedge Fund Icon Edward O. Thorp Turns 92 This Summer

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Edward O. Thorp turns 92 in August but if somone told you that he was in his late 60s or early 70s, you would believe him. The maths guru-turned-hedge fund manager helped pioneer several innovations in the world of financial markets and casino gaming.

First, he authored the now-iconic Beat the Dealer book, which explains how probability theory can be used to try and negate the house advantage in the classic card game of blackjack. The strategy was honed using an IBM 704, testing his game theory that was underpinned by the Kelly criterion.

Thorp put his theory into practice, winning at many blackjack tables in Las Vegas, as well as Reno, becoming a marked man in the eyes of casino operators. The concept of his basic blackjack strategy remains today, despite the growing choice of options online to play blackjack, including several variants that add an extra dimension to a standard hand.

Thorp and his probability theory helped to mastermind the markets

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After honing his knowledge of probability theory, Thorp put it to the test in the stock market. He launched his own hedge fund – Princeton/Newport Partners – and never looked back, becoming one of the godfathers of quantitative fund strategies. His funds achieved 20% returns year-on-year for a 30-year period, comfortably beating the S&P 500 as he focused on longer time frames for returns.

It’s true that Thorp has also been dedicated to his own healthy lifestyle as well as beating the financial markets. His devotion to his health is hugely impressive and it remains just as powerful today, as he approaches his 92nd birthday.

In a recent interview with Bloomberg Businessweek, Thorp provided some insight into his approach to enjoying a happy and productive life. He said that he splits the day-to-day into two aspects – “defense” and “offense”.

Thorp looks at the defense as the ability to weed out weak links in his life, minimizing the potential for exceptionally bad life outcomes, as extreme as death. Thorp says he’s spent time understanding how to minimize many of life’s risks, including the threat of cardiovascular disease. Thorp looks fastidiously at what he eats and how much he exercises.

On the subject of offense, Thorp believes exercise is one of the biggest weapons in his “offensive” arsenal. Thorp says those who exercise moderately can add as many as six years to their life expectancy. This is because those who exercise are less likely to be weak in their later lives.

Thorp looks at his exercise in two ways – aerobic and core strength. Even today, Thorp still dedicates time to walking or a brief jog. When it comes to maintaining his core strength, Thorp spends time in the gym, even at 91, focusing on chin-ups and pushups. Looking at his general body mass, Thorp’s approach to his lifestyle means he only weights two pounds more aged 91 than he did when he was 17. Thorp also revealed he’s had a penchant for marathon running over the years, completing 22 marathons to date. His best time? A hugely impressive three hours and 17 minutes.

Thorp’s financial mindset powers his approach to longevity

Bloomberg asked Thorp whether his mindset honed over four decades in the world of business helps to turbocharge his thinking on health and longevity. He said he tries to manage risks in life in the same way he did as a hedge fund manager. Thorp always looks to quantify and control the risks in his everyday life, such as the dangers of driving a car, by driving in a controlled fashion and not speeding.

As a blackjack player and financial investor, Thorp has lived his life obsessed with finding an edge. He says that he has taken matters into his own hands to find an edge with his lifestyle, assessing the evidence and making necessary changes to maintain a high quality of life.

The Chicago native now resides in his California home in Laguna Beach. This small but picturesque coastal city is a wonderful place to wind down, but it’s clear Thorp has no appetite for slowing down his pace of life anytime soon.