Playing the odds: Lessons from Blackjack
Skilled blackjack players think like investors.
In his book Beat the Deal, author Ed Thorp says the main job is to assess the probability of drawing a favourable hand.
Thorp shows you how to count cards so you can work out when the probability of holding a winning hand moves in your favour.
When the odds favour the player, the best strategy is to increase the bet so you can increase your payout.
Thorp calculates that a favourable opportunity comes up just 9.8% of the time. The odds favour the house the other 90.2% of the time.
The lesson for deal makers is that long term success depends on discipline and expertise. Professional gamblers have played lots of games, they stick to a specific game such as blackjack that increases their zone of competence - then they play the odds.
Professional gamblers only bet big when the odds favour them. In the Casino you have to bet every time you play. In deal making you don’t have to play, until the odds favour you.
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