# William Poundstone

William Poundstone is an American author, columnist, and skeptic. He has written a number of books including the Big Secrets series and a biography of Carl Sagan. He is a cousin of comedian Paula Poundstone.

## Quotes

* Simple rules can have complex consequences. This simple rule has such a wealth of implications that it is worth examining in detail. It is the far from self-evident guiding principle of reductionism and of most modern investigations into cosmic complexity. Reductionism will not be truly successful until physicists and cosmologists demonstrate that the large-scale phenomena of the world arise from fundamental physics alone. This lofty goal is still out of reach. There is uncertainty not only in how physics generates the structures of our world but also in what the truly fundamental rules of physics are.
** The Recursive Universe (1985), p. 31

### Labyrinths of Reason (1988)

* 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.
** Chapter 1: "Paradox", p. 11
* The best paradoxes raise questions about what kinds of contradictions can occur—what species of impossibilities are possible.
** Chapter 1: "Paradox", p. 19
* At a bare minimum, understanding entails being able to detect an internal contradiction: a paradox.
** Chapter 1: "Paradox", p. 21
* 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.
** Chapter 1: "Paradox", p. 23
* The assumption that anything true is knowable is the grandfather of paradoxes.
** Chapter 12: "Omniscience", p. 260

### Fortune's Formula (2005)

* By the mid-1930s, Moe Annenburg was AT&T's fifth largest customer.
** Prologue: The Wire Service, p. 6
* There were many at Bell Labs and MIT who compared Shannon's insight to Einstein's. Others found that comparison unfair - unfair to Shannon.
** Part One, Entropy, Claude Shannon, p. 15
* In American culture the coin toss is the paradigm of the random event. A coin toss decides who kicks off the Super Bowl. Looked at another way, a coin toss is not random at all. It is physics.
** Part One, Entropy, Toy Room, p. 46
* Expectation is a statistical fiction, like having 2.5 children.
** Part One, Entropy, Gamblers Ruin, p. 50
* Far from preventing gambler's ruin, martingale accelerates it.
** Part One, Entropy, Gamblers Ruin, p. 52
* Shannon's most radical insight was that meaning was irrelevant.
** Part One, Entropy, Randomness, Disorder, Uncertainty, p. 55
* In real conversations, we are always trying to outguess each other.
** Part One, Entropy, Randomness, Disorder, Uncertainty, p. 56
* 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.
** Part One, Entropy, Randomness, Disorder, Uncertainty, p. 57
* Use "entropy" and you can never lose a debate, von Neumann told Shannon - because no one really knows what "entropy" is.
** Part One, Entropy, Randomness, Disorder, Uncertainty, p. 57
* The best strategy is one that offers the highest compound return consistent with no risk of going broke.
** Part One, Entropy, Private Wire, p. 69
* A bit is worth 10,000 basis points.
** Part One, Entropy, Private Wire, p. 75
* Kelly was aware that there is one type of favorable bet available to everyone; the stock market.
** Part One, Entropy, Minus Sign, p. 75
* The story of the Kelly system is a story of secrets - or if you prefer, a story of entropy.
** Part One, Entropy, Minus Sign, p. 76
* The dealer now theorized that Thorp was memorizing the entire deck. He knew exactly which cards remained in the deck and bet accordingly. Thorp said it was impossible for any one to do that.
** Part Two, Blackjack, More Trouble Than an $18 Dollar Whore, p. 96 (See Also: Stu Ungar Section; Blackjack)
* 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.
** Part Two, Blackjack, The Kelly Criterion Under The Hood, p. 102
* From Adam Smith through John Maynard Keynes, economics had been mostly talk. At Harvard economics was talk. At MIT, Samuelson made it math.
** Part Three, Arbitrage, Paul Samuelson, p. 117
* Samuelson spotted a mistake in Bacheliers work. Bachelier's model had failed to consider that stock prices cannot fall below zero.
** Part Three, Arbitrage, The Random Walk Cosa Nostra, p. 122
* Samuelson, however, hedged his personal bets - by putting some of his own money in Berkshire Hathaway.
** Part Three, Arbitrage, The Random Walk Cosa Nostra, p. 125
* 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.
** Part Three, Arbitrage, This Is Not the Time To Buy Stocks, p. 132
* "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.
** Part Three, Arbitrage, This Is Not the Time To Buy Stocks, p. 134
* 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.
** Part Four, St. Petersburg Wager, Daniel Bernoulli, p. 184
* Your second ducat, like your second million, is never quite as sweet.
** Part Four, St. Petersburg Wager, Daniel Bernoulli, p. 186
* 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.
** Part Four, St. Petersburg Wager, Natures Admonition To Avoid The Dice, p. 191
* To hedge the bets he made every working day, Meriwether kept a set of rosary beads in his briefcase.
** Part Six, Blowing Up, Martingale Man, p. 278
* For reasons mathematical, psychological, and sociological, it is a good idea to use a money management system that is relatively forgiving of estimation errors.
** Part Six, Blowing Up, Survival Motive, p. 296-297
* The ultimate compound return rate is acutely sensitive to fat tails.
** Part Six, Blowing Up, Survival Motive, p. 297
* The problem with winning at blackjack and sports betting is that sooner or later a big guy in a suit tells you to leave.
** Part Seven, Signal and Noise, Hong Kong Syndicate, p. 323