The episode features Aaron Brown, a former professional gambler turned Wall Street quant trader and risk manager at AQR Capital Management. The conversation traces his fascinating journey from a 14-year-old poker player in Seattle to becoming a prominent figure in financial risk management.

Key Points Discussed:

1. Early Years:

• Started reading financial pages and horse racing data as a child
• Began playing poker at age 14 in Seattle taverns
• Used gambling to help pay for his Harvard education

1. Professional Gambling:

• Developed from local games to high-stakes private games
• Played with influential people including politicians, businessmen, and academics
• Emphasized the importance of social skills in professional gambling
• Discussed the evolution of poker from underground games to mainstream entertainment

1. Sports Betting:

• Explained the transformation of sports betting from mob-controlled to modern markets
• Discussed quantitative approaches to sports betting
• Emphasized the importance of getting bets down early and providing valuable information to bookmakers

1. Wall Street Career:

• Transitioned from gambling to quantitative trading in the 1980s
• Detailed the evolution of mathematical approaches on Wall Street
• Explained the transition from floor trading to quantitative analysis
• Discussed his role in mortgage-backed securities and derivatives

1. Risk Management Principles:

• Emphasized the importance of proper bet sizing
• Discussed Kelly Criterion and its applications
• Highlighted common mistakes in trading and betting
• Stressed the importance of emotional control in decision-making

  Books:

  • "The Poker Face of Wall Street" (2006) - https://www.amazon.com/Poker-Face-Wall-Street/dp/0470127317
  • "Red-Blooded Risk: The Secret History of Wall Street" (2011) - https://www.amazon.com/Red-Blooded-Risk-Secret-History-Street/dp/1118043863
  • "Financial Risk Management For Dummies" (2015) - https://www.amazon.com/Financial-Risk-Management-Dummies-Brown/dp/1119082200
  • "A World of Chance: Betting on Religion, Games, Wall Street" (co-authored with Reuven and Gabrielle Brenner) (2008) - https://www.amazon.com/World-Chance-Betting-Religion-Street/dp/0521884667

  Website:

  • Personal Website: http://www.eraider.com

  Professional Background:

  • Former Chief Risk Manager at AQR Capital Management
  • Columnist for Wilmott and Quantum magazines
  • Editorial Board member of the Global Association of Risk Professionals
  • Member of the National Book Critics Circle
  • Harvard University (SB in Applied Mathematics)
  • University of Chicago (MBA in Finance and Statistics)

  You can also find his articles and commentary on:

  • RealClearMarkets: https://www.realclearmarkets.com/authors/aaron_brown/
  • Goodreads Author Page: https://www.goodreads.com/author/show/229051.Aaron_Brown