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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: koan who wrote (12452)	6/1/2006 12:48:05 AM
From: E. Charters	Read Replies (1) of 78416

There is another way to beat black jack even when they used 5 decks. It is based on a misconception that is often repeated concerning odds, that they do not change as outcomes are accumulated. Pascal would wretch at that. Of course they do!! Outcomes are what Thorp watched. They change as the cards change. He bet as the cards came out changing the probability field of the deck. It depended on the deck varying in distribution randomly but predictably in that it would vary high cards one end just so much more, low cards at the end other times.. In other words he could change his style of play because the house played in a way that favoured a low card deck only. If they varied their play too, his system would not work out. It took Thorp one year of super computer work to see his system would work. He played chances with enough money to overcome the dealer's edge. You would need 100K to do that today with one deck. (Chances are hard for most people to see as they are not a demonstrated by a single outcome but a probability field. Even as simple a field as of the two goats/cadillac where the field is restricted are difficult for even trained mathematicians to see. I can understand why they cannot see the probability field of black jack with 52 outcomes is not changed by a field before the player. Of course it is.) Why does the house win? Because they have "infinite" money relative to most players, i.e. they control the deck and can always play and play, there is no busting on cash. Also they play according to a strict system. If a player played like that with loads of cash he would eventually break even at least. But with one more edge he can consistently beat the house by coming closer to 21 more often. This edge I have observed and it works out in theory as well. You can count cards with 10 decks. It is the same deal, only 520 things. big deal. More interestingly he learned something about counting outcome in stocks that he realized reacted to changing supply and demand of the money supply. As the market rises the money supply changes hands, accumulates into certain type of players and is reduced from others. This clued him to a system that became the hedge fund. That cannot be withdrawn from action. Computer trading started with Ed Thorp. Few seem to know that secret. A friend of mine did a BA thesis in psychology where he proved his thesis that the market reacts like an animal in a deprivation experiment that is rewarded and punished by its cycles. Or more properly the market animals are buying and selling according to reward. If his thesis was correct then it should be predictive of cycles. He used his theory to make abvout 20,000 from 100 dollars in 6 months. He lost it all in about 3 days when bank stocks collapsed. (this was about 1980.) His mistake was not the system, which could not possibly be 100% predictive because it did not take into account sudden singularities. i.e had no hedging, stop sells, or money management which are all important. It is more important to manage loss which can be catastrophic and must be hedged, than to manage gain which is more often incremental. It is very interesting that it was as predictive as it was. I wish I could get my hands on that thesis, but most undergrad theses are not maintained by the universities. EC<:-}

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