Tag Archives: Poker

Playing the Odds


Banker “Suicides”; Economic Myths; Food Crises; Gold Stock Analysis?


The string of suicides among the leading bank employees is indicative of the change in trend. The major Wall Street banks including Bank of America, Goldman Sachs, JP Morgan, Credit Suisse, subsequently told junior bankers to take more time off since the death at Bank of America last August of a 21-year-old Bank of America intern who died after reportedly working consecutive all-nighters at the bank’s London office.


An excellent course on behavioral economics. I took this course and highly recommend but it is a time commitment of $six to eight hours per week. Improve the YOU. https://www.coursera.org/course/behavioralecon

POKER: To learn about investing in the 21st Century: The great poker movie, Rounders: http://www.tfmetalsreport.com/blog/5494/rounders

Munger on Investing: http://www.valueinvestingworld.com/

Any interest in analyzing a gold stock? http://youtu.be/NML5-dgp1u4

Economic Myths

Myth #8: The Fed provides a net benefit to the US economy

It never ceases to amaze us that people who understand that it would make no sense to have central planners setting the price of eggs believe that it is a good idea to have central planners setting the price of credit.

Myth #2: The Fed’s QE boosts bank reserves, but doesn’t boost the money supply.

It’s a fact that for every dollar of assets purchased by the Fed as part of its QE, one dollar is added to bank reserves at the Fed and one dollar is added to demand deposits within the economy (the demand deposits of the securities dealers that sell the assets to the Fed).

Myth #12: Inflation is not a problem unless the CPI is rising quickly

The conventional wisdom that “inflation” is not a major concern unless the CPI is rising quickly is not only wrong, it is also dangerous. It is wrong because monetary inflation affects different prices in different ways at different times, but the resultant price distortions always end up causing economic problems. It is dangerous because it leads people to believe that there are no serious adverse consequences of central-bank money printing during periods when the prices included in the CPI are not among the prices that are being driven skyward by money printing.

Read more:Economics_Myths_on_Fed_Reserves_Saville

An Expert on Bear Stearns:

 Why the rioting? fig1_crises

Social unrest may reflect a variety of factors such as poverty, unemployment, and social injustice. Despite the many possible contributing factors, the timing of violent protests in North Africa and the Middle East in 2011 as well as earlier riots in 2008 coincides with large peaks in global food prices. We identify a specific food price threshold above which protests become likely. These observations suggest that protests may reflect not only long-standing political failings of governments, but also the sudden desperate straits of vulnerable populations. If food prices remain high, there is likely to be persistent and increasing global social disruption. Underlying the food price peaks we also find an ongoing trend of increasing prices. We extrapolate these trends and identify a crossing point to the domain of high impacts, even without price peaks, in 2012-2013. This implies that avoiding global food crises and associated social unrest requires rapid and concerted action.

Tweet Map (clickable)

Clickable food prices tweet map

Press Release: Scientists show link between food pricing and global riots

A new Cambridge study issues stern warning for policy makers

(CAMBRIDGE, MA) — A new study shows that the timing of outbreaks of violence rocking North Africa and the Middle East is linked to global food prices.

Today’s headlines explode with stories of failed political systems, harsh regimes, and denial of rights underlying riots and warfare. The authors, however, point to rising food prices as a key factor too–not only in assessing the aftermath but in predicting future times of unrest.

The study, titled “The Food Crises and Political Instability in North Africa and the Middle East,” is by Marco Lagi, Karla Bertrand and Yaneer-Bar-Yam of the New England Complex Systems Institute.

Using detailed charts showing data from the FAO Food Price Index and the timing of the riots, the authors were able to demonstrate how food prices have a direct link to the tipping points of unrest and upheaval.

The authors also criticize the deregulation of commodities markets in the US as contributing to the rise in food prices.

The authors issued a stern warning that if food prices remain high, disturbances will continue. Averting further crises this year and next requires quick and concerted action by policy makers, they added.

“Our predictions are conditional on the circumstances, and thus allow for policy interventions to change them. Whether policy makers will act depends on the various pressures that are applied to them, including both the public and special interests,” said Prof. Bar-Yam.

Making the Wrong Move at the Right Time – Cincinnati Kid

The dealer is incredulous. “You’re raising tens on a lousy three flush?” she says to Robinson. Robinson never should have made that bet since he had only the slim makings of a straight flush and he was staring at McQueen’s pair of tens. You don’t often beat two pair, and certainly not a full house.

Lesson for an investor?

Hint: The market is no place for “making the wrong move at the right time.” Stick to your plan. Don’t personalize losses or success–especially success.

Bridge & Buffett, Poker, and Investing

As students of investing we want to improve our skills though studying great investors, understanding and applying the proper principles and learning from case studies to make our education less costly, more profitable.

Only you can do the hard work of introspection of what your strengths and weaknesses. One fun way to improve is to play bridge or poker.  Buffett plays bridge as described here:


Why Warren Buffett plays bridge

Aside from an affection for cheeseburgers and Cherry Coke, one of the personal facts commonly known about Warren Buffett is his love of bridge, which he periodically plays online with Bill Gates.

Why bridge? Though Graham wasn’t talking about Buffett at the time, he
offers a clue:

“I recall to those of you who are bridge players the emphasis that bridge experts place on playing a hand right rather than on playing it successfully. Because, as you know, if you play it right you are going to make money and if you play it wrong you lose money – in the long run.

There is a beautiful little story about the man who was the weaker bridge player of the husband-and-wife team. It seems he bid a grand slam, and at the end he said very triumphantly to his wife ‘I saw you making faces at me all the time, but you notice I not only bid this grand slam but I made it. What can you say about that?’ And his wife replied very dourly, ‘If you had played it right you would have lost it.’”

It takes an enormous amount of restraint to focus on playing every investment hand “right,” according to an established discipline, allowing the law of averages to work in your favor, rather than trying to win every hand. I would guess that this is exactly what appeals to Warren Buffett’s temperament. Over the long-term, good investing requires it.

Those quotes are excerpted from Hussman Funds. I recommend you bookmark this website: http://www.hussmanfunds.com/

Play Poker

My plug is to suggest a few hands of poker.

There are few things that are so unpardonably neglected in our country as poker. It is enough to make me ashamed of one´s species. Mark Twain.

If you look around the table and you can´t tell who the sucker is, it´s you. Paul Scofield, playing the role of Mark Van Doren in Quiz Show.

Poker, the game exemplifies the worst aspects of capitalism that have made our country so great. Walter Matthau.

A guy walks into a bar and notices three men and a dog playing poker. The dog is playing beautifully. ¨That´s a very smart dog,¨ the man says. ¨Not really¨ says one of the players. ¨Every time he gets a good hand he wags his tail.¨

Depend on the rabbit´s foot if you will but remember, it didn´t work for the rabbit. Anonymous.

Poker will teach you about odds, money management, human psychology and your own temperament.  An important lesson for investors is to maximize your winning investments. Joel Greenblatt, George Soros, Warren Buffett and Charlie Munger all were experts at heavily weighting their best investments because they could distinguish good opportunities.  They knew the importance of being paid well for finding the rare opportunity.  A few weeks ago in early October we had (and may still have) cheap valuations on some quality companies (AMAT, CSCO, MSFT, MDT, NVS, SYK–in my opinion and easy now to say in retrospect) because we had low expectations for growth, high anxiety, and hyper easy monetary conditions. Opportunities like that don´t appear often. Make the most of your chance. Now pundits are saying we are not going into a recession; where were they last month?

Poker STrategy

Poker strategy will drive home that lesson in spades (sorry). Poker is beautifully
simple, wildly complicated, and in its essence, pure Machiavelli and Sun Tzu,
if one plays better than the other, if he out-thinks and out-strategies, then
he will win the most money. Poker isn´t about the number of pots you take down, or how fantastic you look winning them. Claiming a pot when you have the best cards isn´t enough to make you a winning player. Remember, there is no grand pay scale for holding the best hand. No one gives you a pile of money for drawing a royal straight flush. Some sucker has to pay you off. You have to
maximize profits through guile and savvy, eke out every last dollar that your
competition is willing to lose to you–and, when you don´t have the winning
cards, flee as fast as possible. (Poker Nation by Andy Bellin).

Good luck and rub that rabbit´s foot.