Bettor Thinking

From Poker Prodigy to Wall Street: How a 14-Year-Old Gambler Became a Quant Trading Legend Aaron Brown Ep 002

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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
                              • ...more
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                              Bettor ThinkingBy John Alesia