The Derivative - Playing like a Poker Pro in Life/Investments/Career with Chris Sparks

Episode Date: February 18, 2021

Talking this week with Poker Pro Chris Sparks on everything from game strategy to deciphering A.I. capabilities and catching bots. With Founder, CEO, and Performance Coach of The Forcing Function we��re taking it back to the beginning where we dive in with Chris about an interesting online alias “GoMuckYourself”, grabbing seats at poker tables in Vegas, exploring his latest paper “Play to Win: Meta – Skills in High Stakes Poker” and using behavioral science and system thinking to lead a new generation in the game and the investing world with Peak Performance Architecture. Chapters: 02:36-19:10 = Gambling for a Living 19:11-28:27 = Data is Power 28:28-50:37 = Playing to Win 50:38-59:00 = Sizing Bets & Catching Bots 59:01-01:13:34 = Peak Performance Architecture 01:13:35-01:20:20 = Playing the Investment World 01:20:21-01:32:34 = Favorites Read Chris’ Play to Win: Meta-Skills in High-Stakes Poker and his honorable mention to check out  Fortune’s Formula: The Untold Story of the Scientific  Betting System that Beat the Casinos and Wall Street Follow along with Chris (@SparksRemarks) on Twitter, and check out the forcingfunction.com website. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk

of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. I think everything is a system. And so thinking about poker as a complex system with emergent behavior in an uncertain dynamic world has certain implications. And so I use kind of this straw man of the game theory optimal player, which operates off of static models, when you really need to be thinking

about how things evolve over time, as well as the second and third order effects of your decisions. So an example in poker that's pretty simplistic is i make a bluff and my opponent sees that i make a bluff i show some garbage hand like eight five off suit and i'm having me showing that bluff is going to cause my opponent to make an adjustment and so before i make any move um i'm anticipating how my opponents are going to adjust and and I'm having a counter already in place to their adjustment so that anything that I do can never be considered in a vacuum. It's part of a sequence of plays with each of which has second and third order effects. You got to know when to hold up, know when to fold up, know when to walk away, and know when to run. You never count your money when you're sitting at the table.

Hi, everyone. Playing poker profitably is the ultimate exercise of removing emotion, systematically analyzing probabilities, and executing a strategy to maximize the expected outcome, which sounds a lot like investing. So I'm excited to have Chris Sparks with us today, who has played over 2 million hands of poker, and has since taken those lessons learned and turned them into a successful strategy of teaching other people how to think like a poker player and apply it to their business, their portfolio, and their overall life. So thanks for joining us, Chris. Really excited to be here, Jeff. Thanks for the great intro.

Awesome. Yeah. So we were talking a bit before we got on, you're usually in New York, but you've been in Austin during COVID. What's that look like? Yeah, I think that our location, our environment is one of the biggest leverage points on our behavior. So as priorities have shifted through all of this, as contexts have shifted, looking for an environment which is more supportive of what I'm looking to do these days, I realize the importance of family and community. So North Carolina and now Austin allowed me to pretty, pretty straightforwardly and prioritize those values, as well as just I

found it more difficult being in the heart of the storm to make long-term decisions. It was very easy to become reactive, tied to the news cycle because everything felt actionable, particularly back in March and April. So having a little bit more separation from the things that are happening, I think has been really beneficial for taking that long-term view. And so you got out of there right as the lockdowns were happening and everything or before that? I went upstate with my partner, Hudson, New York, if you guys know it, in March.

We stayed up there till June and then went down to North Carolina. My family's in Charlotte. My partner's family's in Raleigh. So that was a good opportunity to be to be closer to them and then yeah here in Austin where things are you know it's it's a completely different world I think so much of our perception is shaped by who's around us and here sometimes you wouldn't even know that there's a pandemic happening in terms of behavior, which I think is kind of beneficial just for sanity. And so rather than being the person

who is, oh, we need to take this more seriously. I'm surrounded by people are like, oh, it's not really a big deal. And so I've kind of, it's like interesting how it causes us to shift sides just by who we're surrounded by. So just yeah,, spending a lot more time outside, 80 degree days. We were on the lake the other day in February. It's wild. So yeah, it's been nice. I don't know. It seems like you just built that whole narrative, but the real reason is just tax, right?

You know, I think that's a big driver for a lot of people coming from the coast. SF has had a huge access here. Lots of tech coming in. You know, I think, yeah, it's an interesting thought that we do construct this narrative in hindsight. Who knows what the ultimate drivers are. And then I've got to ask you what those paintings are. Because they look, on my Zoom here, they look like they're like blurred out. But I think that's how they're supposed to look.

Yeah, I would love to take credit. My partner, Marinette, is an artist and has some amazing work. I am currently in Airbnb. So on my left, I don't have any personal attachment to them. This one is from Patagonia, which I actually have visited a couple times um i like a lot of mountain metaphors in my work so um you know that one's a cool one to have by is like hey we're all taking different paths to the top of the mountain that sort of thing uh that have you seen those uh have you seen that stock chart art person i'll put links in it i'll send it to it's really cool she has like um

like tesla was one and it kind of like a space scene but the mountain range is the stock chart and then they have all this so she makes art out of the stocks which is cool oh beautiful uh and then patagonia i love it i was my sister got married in uruguay uh it's like 10 years ago so we spent some time in bariloche and the uh was it the Chow Chow Hotel that big old hotel oh Chow Chow yeah it's gorgeous yeah uh love I love I love that area because the culture is so opposite from New York so you know Argentina Uruguay very European influenced you some French, you have some Italian. So it was very kind of manana culture, slow down, three-hour dinners, three-hour coffees at 10 p.m.

And for me, it was just very refreshing to experience something that's so opposite from the norm. For sure. That's on my bucket list one day to go down and actually in the summer and ski in patagonia that'll be good um so also uh in your body you've got the ohio state university so a big buckeye fan i am yeah my my social calendar uh revolved around the buckeyes for for a decent amount of time. When were you there for any of the national championships?

I was. Yeah, my timing was pretty good. We won, I believe, two championships while I was in school. This was the Urban Meyer. Urban Meyer was there. Yeah, this is the 2004 to 2008 um you know we we beat michigan all four years i do remember um basketball teams were were quite good as well um these were the greg odin years so uh yeah it was a good time to be a sports fan poor greg odin right what was the number two draft pick and played like 30 games total or something? Number one, yeah, before he got picked before Durant. And, you know, it's easy to say in hindsight, right? If you have a very large body, it puts a lot of strain on joints. But, man, I mean, he was just so dominant in college.

It was hard to predict that he wouldn't have that sort of impact of like an Anthony Davis that we're seeing. And's just having that that big man who can take up space um down low especially you know I don't follow NBA as much as I did but everyone's shifting to the kind of four guys on the perimeter one guy down low having that one guy down low would be really dominant um has a really big impact the um and what do you think of Justin Fields? Is he going to make it NFL? Looks pretty good. Hard to say.

I mean, the game has changed. You know, running quarterbacks aren't really having the success that they were in. I think defensives have adjusted, and he seems like he does best when he's on the move. That'd be the question is like, hey hey can he adjust to being a pocket passer yeah tough to uh not so much um so let's get in how did you uh first started playing poker and when did it become a career versus just a hobby what did that all look like

it's it's funny telling the story because you know i'll just like any narrative that shortens what did that all look like? It's funny telling the story because, you know, just like any narrative that shortens, it feels clear. Where I usually start is I do have a bit of a gaming background. So most notably, I played a lot of gin rummy growing up. That's the one-on-one form of rummy where all the cards are held in your hand. Like Goldfinger. Yeah. Yeah. So from a very early age things of incomplete information where I am trying based on the opponent's actions to figure out what cards they need or in a

sense, what are they trying to get me to do and doing the opposite? That was kind of drilled into me from a young age. I started playing poker completely unseriously around the age of 14, playing just free roll tournaments where, you know, didn't put any money up, but you had the opportunity, hey, if you outlast tens of thousands of people for 12 hours, maybe you can win a $1,000 prize as sort of a promotion to get new money onto the site. It started to pick up for me when I entered university at Ohio State, as we mentioned, where Chris Moneymaker had just won the World Series in 2003.

So poker was on ESPN 24 hours a day. And just if you're doing anything socially, it was especially with guys, it was playing poker. So playing some of the underground campus dorm games there. Some of my friends started playing online in the early online poker days. This was like, let's say party poker, which led into PokerStars and Full Tilt. So I started playing tournaments in my spare time having some success. My junior year, I had a couple of five figure scores, decided that, you know, I've mastered tournament poker,

now it's time to move over to cash games, and hopped into cash games where I accelerated my learning curve by playing 24 games simultaneously, paid some tuition for a couple of months while I figured out the ropes. You have like a multi, like a trader screen set up multiple bunch of monitors. Yep. Yep. Multiple 30 inch monitors. One monitor for games, another monitor for analytics. You know, started to get to the point in my senior year where I was, you know, paying off my tuition, addition to my campus job, I was selling advertising for the school paper. And all the time, I thought that I was going to go into the corporate world. I had this job lined up with Ford and brand advertising,

working with Team Detroit on their television commercials, which was my dream from a young age. A lot of them probably since from the age of like 13, that's what I want to do is try to make Superbowl commercials. And, you know, 2008 for everyone, you know, probably more people listening to this have, have had some deep visceral feelings when that is, when I say that, that that year. Mine's joy.

Yeah. Joy, yeah. It was that, it was an unfortuitous time to come out of college and Ford put on a hiring freeze. So I was sort of in this purgatory where I was waiting for this hiring freeze and sitting in Detroit in the winter, didn't know anyone, didn't have anything to do. So what was kind of a part time hobby in college became a-time, you know, 80 hour a week. You're from Detroit originally? I'm sorry?

You're from Detroit originally? No, I grew up in Cleveland. Oh, all right. Yeah, I lived in Ohio to that point. Yeah, Ford's based in near Detroit. So I assumed that I was going to be starting work any moment. And this was just like the dream time where I can do whatever I want before I have to enter into the real world. And after a few months of, you know, 80 hour a

week, I got to the point that I was making what my annual salary would have been on a monthly basis. So I said, Hey, maybe, you know, maybe that whole corporate world thing isn't for me. I started consulting with other players, and I built an investing arm where I would put up the capital for up and coming players so they can play in larger games and we would share the upside. And, you know, really, you know, through this process of teaching, watching others, picking up the best of what others are doing. About 18 months later, I moved out to LA, got a kind of co working house with four other players where we just, you know, talked about poker all day really sharpen each other's game. After 18 months of that, I was ranked in the top 20 in the world. So you know, I started 14. This point, I'm 23. So it's like nine years of playing some full time, some not so full time. But it was really that that three years where it was a, you not so full time. But it was really that that

three years where it was a full time thing, both teaching, investing and playing the things really took off for me. And when you what is it? Did it start to feel like a job where you're like, this is a bore? Was it always exciting? That's a good question. I think it's funny. So right now, I'm a part-time poker player. I play 15 to 20 hours a week. And the players that I play against are a whole younger generation, younger than me. So they're like I was, 21 to 23, when most poker players tend to peak. And they complain like, oh, poker is such a grind. It's so hard. It's like, well, just start a business and all of a sudden you'll be really motivated to play where I just didn't know how good that I had it because it's just ultimate freedom, ultimate control. The feedback loops are so tight. I mean, I think that's a

major difference from a lot of forms of trading is you just immediately testing your assumptions. And it's almost like a video game, particularly playing multiple games online. And it took doing other things in the real world to realize, wow, this I have it pretty good. And so your top 20 in the world who at that time, who are some of the other names on that list above you or around you? So you wouldn't know any of them. Okay. This is, so I have to be specific in these rankings. This was top 20 cash game players online all time. So the other 19 are screen names, which would sound very silly if I read some of those out.

Most of the players who people know, they know because TV has put them forth as a professional, which generally means that they happen to be playing and have a character, like a personality that they could rally around, hero or villain, around this 2003 to 2006 time period where poker was everywhere. And so a lot of these guys actually made more from endorsements than they ever did playing poker,

or they were independently wealthy and just liked the fame. The most profitable players in poker in the world are players that no one's ever heard of, or in general, either they play online, they're a little bit more secretive about their identity, or they play in private games where, you know, these games just aren't shared, whether it's in Macau, or whether it's in a penthouse in New York or a mansion in the Hollywood Hills, something like that. Now, I differentiate here between tournament players and cash game players. There's tournaments.

Obviously, these are very televised. All of these results are public. And so you'll see people who have like 20, $30 million in winnings and earnings, right? But you don't know how much they've invested in buy-ins. And some of these guys have done extremely well, but it is not uncommon to see someone playing in a $10,000 tournament with less than $10,000 in their name. Generally, people who are playing these large tournaments have backers, outside investors who are putting up the capital. And so these guys are just have a portion of the upside. Same thing when you see

high stakes televised cash games where people buy in for 100,000. Usually, it's not their money that someone else has put up the money on their behalf so potentially the biggest poker winners are those who are backing the right horses and you've been so that was can you name one what was your screen name i'm a little bit embarrassed to admit it now you have to keep in mind i was 16 when i made this screen name it was uh go muck yourself go muck yourself i love it yeah so muck for those of you guys um who are less familiar with poker is you you fold your cards with i'm sorry you you you yeah you fold your cards without showing or the other person folds without showing so that's the whole idea is like i'm making the other person fold and you know i'm sticking it to them in a way.

So this kind of brings up for me, there's a whole, when you don't have that much that you can give an image, the screen name says a lot. And so having a screen name that sort of gets under someone's skin. A little bit aggressive. It's a little bit aggressive, gives the impression that, hey, this is a crazy guy who takes things personally. All it's meant to do is just to get people to call me a little bit more just to stay out of my way. It's all this image creation. You mentioned that analytics, how does that all work? So is that third party software that you tack on? Is it available through the sites? What does that look like?

Yeah, both. So this was my heyday where I was really a pioneer in the poker world was, as I mentioned, 2009 to 2011. And so at this point, you could download all of your hands from the sites. And there are third party database tools based on Postgres SQL, if you guys know that statistical program, where you could kind of slice and dice this type of stuff, either to see population level data, what are people doing in these situations on average, or going really deep into one player, say, hey, in a million hands, this very specific long tail scenario has only occurred 20 times, but they fold 20 times. And so it's not just your hands, you could get anyone's hands

and each individual user by screen name. So we had access to our hands, but there were third party data providers back in the day, these got shut down since where you could purchase all those hands. So that was the biggest line item on my, my tax. My taxes every year was purchasing hands because I wanted to have every single hand ever played because, you know,

data is power in this way because I'm really looking for these very long tail scenarios because these are I talked about this in play to win, which I'm sure we'll talk about this concept of centrality is that everyone is studying the scenarios that are most common. So an example in poker is small blind versus big blind. This is a scenario that just happens so often that people know it extremely well. But there's these situations that happen very happens so often that people know it extremely well. But there's these situations that happen very, very rarely that people just don't know what the right move is. And thus, they have very clear proclivities. But what I can do is I can steer the gameplay for these long tail scenarios that I've studied more and thus gain a relative advantage.

Like give what's an example of one of those long tail scenarios? It could be something, could be something like check rays bluffing on the river. It could be board texture specific, like, you know, four flush boards. So say four, four spades on board or four straight boards like five, six, seven, nine, where any eight makes a straight. Scenarios that don't occur that often, but again, that there are much larger edges when those situations do occur because they're less studied. And so the people who don't study them are likely just going to fold and be like, I don't have a strong opinion on this. I don't know this hand. I'm just going to get out of the way.

It's a bit more nuanced than that. This is, this is where knowledge, you know, playing the man comes into play. You have certain types of players who, when they aren't sure we'll take the safer option. It's like, I'm not sure what's going on. I'm just going to like not get involved. I don't want to make a mistake. And then you have other players who will do the opposite where normally they're just autopiloting. And all of a sudden, they're in an unfamiliar situation. And they're forced to think and maybe someone who's really likes being comfortable has, you know, likes being in these spots that are well studied, isn't so good when they're forced to think on their feet. How do you, you said play the man or woman, but how do you,

if it's online, how do you play the man or woman, right? You don't, you can't read their face. This is one of my favorite questions. And this is probably the question that people are like, I have no idea what you're talking about. So how do I take a game that takes place completely inside of my head that is pre-language, right? I don't have language for the things that are occurring. How do I translate that into something that someone who hasn't experienced it understand? The way that I usually describe it is I'll use it because a lot of people listening to this are investors. I'll use an investing metaphor is there's always a counterparty on the other side of the trade. So sometimes you know who that counterparty is, if you're dealing with them directly, or you know, there's a large buyer out

there. But generally, you don't know. And that's just because you can't see them doesn't mean there isn't another person on the other side. And so when you're playing online, I'm playing against other players. They have feelings, they breathe, they have moods, they have good days, they have bad days. And we have this lossy translation interface of a screen where even if I can't see, hear, touch, smell them, there's still another person on the other side and there

are still signals being transmitted. So the speed with which they bet, the numbers that they type in, anything that they can, they type in chat, these are all indicators, lossy, right? There's a lot of noise there of what they're feeling in this moment. Not to mention that we are all pattern driven creatures. And so if I can discern someone has a behavioral pattern, right? I think all of us are deterministic. If you can determine the context, you determine the behavior. So if I can recreate the situation, I generally know I can recreate that behavior.

So I'm looking for these patterns, either the way that they bet or the way that they value hands or undervalue hands. These are all things that I can exploit once I once I get a baseline for them, because I'm become very sensitive to, to say deviations from that baseline. So it's, it's almost, it's very intuitive, intuitive, in a sense, when I say intuition, that it's just internalized experience when i've seen millions of hands i just have this fingertip feel that even if i can't put it into words i know this person is weak or i know this person is strong or i know this person is tilting or i know this person is pulling back and doesn't want to make a mistake even if they

just showed up at the table right that's the other thing like a lot of that to me assumes like i've been watching this you know my username would be some star wars thing like akbar jr or something so be like i know akbar is weak because i've been watching him at this table for three hours right but what if i just show up at the table or right how do you how do you you still have that intuition even if you have relatively little knowledge of that specific user or screen name so it touched on two things first i think is is is session level personal persona so generally i'm playing with the same people every day especially with professional players you're talking like 50 people in the world who i'm playing with every single day. And so most people I'm playing with, I have a very, very good feel for.

I've played hundreds of thousands of hands. So that is very investing world-ish, right? Of like, I'm going into this market and it's the same 50 players at the back of Citadel, at Susquehanna, et cetera. It's the same people who are showing up every single day. So there's a lot of metagame there, a lot of losing battles in order to set up to win future wars, as I like to say, where losing plays look like winning plays. There's also some of the, you know,

generally my profits come from recreational players. And still, like, even though I don't see these recreational players every day, I'm taking notes on them, I'm observing them. I have a general idea of how they play. You know they're not one of the 50. If someone shows up who I don't know, I assume that I have an edge on them. Now to your exact question, someone who shows up who I've never seen before, who is just, you know, unknown player X, no information. What I'm trying to do is to collapse on an archetype of this player. So if you think about this as a two by two, the basic dimensions of this archetype are,

is this player tight or loose? So do they like to play lots of hands or do they like to play very few hands? And then the other dimension on this two by two is passive or aggressive. So passive, do they tend to call or aggressive? Do they tend to bet and raise? And so the way that I play against someone who collapses into this tight passive box is very different than someone I collapse into this loose, loose, aggressive box. And then again, like just having collapsing on this archetype, I can generally have an idea of how they're going to play these situations based on that archetype. But I'm also, I like the, I like the framework of Bayesian updating every hand that I see this player

tells me confirms or disconfirms one of my assumptions about them. And because I, the less that I know about them, the more that I overweight every single hand that I see them play to a certain point that anything they do won't change my overall perception of them, except for how they're feeling in this moment. And then the trick is they're on the other side

trying to fool you into putting you into an archetype, right, of like, I'm trying to make you think I'm passive until you think that, and then I go aggressive, which is the, that's the trick. So you mentioned the play to win paper. Let's get into that. When did you write that? Or when did you put that out?

I put it out a couple of weeks ago. Okay, yeah. I've been writing it on and off for a while. Okay, yeah, so recent. At some point, I was like, oh, did I just read it recently? And you've had it out there a while, but it was recent. So we'll put it in the show notes. Great paper, play to win meta skills and high stakes poker. So give me kind of the elevator pitch and then we can dig into a few of the specifics then. This is good practice. If I had a good elevator pitch, it probably wouldn't have taken me six months and 8,000 words to encapsulate. I would start by saying, so obviously it's in the title, playing to win. And the implication is that I don't think most people are playing to win.

They're either playing to satisfy some other value, or they're mistaking something they're doing as winning when it's not. So there's a subtle distinction that I make between someone who's skilled, at least defined by others, and someone who has the best results. And I think the primary determinant of that is what I refer to as meta skills. So things that unlock adjacent conventional skills. And the overarching formula that I give for this is that winning equals opportunities times strategy times execution. And the idea being that winning is emergent, and it's also multidimensional, right? You have these three dimensions that are somewhat independent,

and it's multiplicative. That if you're low on one of these dimensions, it drags everything else down. That this bottleneck framework, that you're only as good as your weakest attribute of these three, but also that, hey, if you improve one of these dimensions, your results will multiply. So these three dimensions, opportunities, right?

The thing of this is maximizing your surface area. You can't win the game if you don't get into the game. That's something that I've really learned about investing is very true about poker is getting the opportunities to invest is a huge part of success. You can be the best player, but if you aren't playing, you aren't going to win. Strategy. I think of this as dynamics. So a sensitivity to conditions as they change and having a strategy that works across regimes, across situations that is dynamic, that is able to reorient to these changing conditions. And then finally, execution. The analogy I always give here is like the best diet is the diet that you can stick to,

right? The best strategy is no good if you can't stick to it when you need to. So I think this is something that RCM does very well as far as, hey, managed futures is something that if you have in your portfolio, it'll allow you to stick to the best strategy. That even though all of our analyses are based off of cold mathematics and logic, we are not mathematical logical creatures and we need a system that we can stick to. All right. Well, that was a long elevator, but I'll take it. And so assuming we're going to the top floor. Yeah. And when you mentioned opportunities,

it just popped into my brain like half at least of Warren Buffett's success probably over the last 20 years has just been having the opportunities, right? Like in 08, he got to buy the Goldman warrants and yielding 5%. And, right, he has that cash pile, he sits, he waits for the phone to ring. So is that sort of how you think of it? Or dig more into the opportunities that you're talking about? Absolutely. So we're referring to as deal flow, that if you can establish a reputation, if you can put yourself in the right networks, if you can be referable,

right, I think of I think a lot of life is like Google search results. And that if you're not the first person that someone thinks about is like, Oh, you need to talk to Chris about this, you're generally not going to hear about it. So you know, Warren's the first call unless he gets the first first crack at the bat and you know the opportunities section i'm talking using this poker lens how you can put yourself into this flow or you can get through the deep get through the back door where you don't have to be waiting in line looking at the same deals as everyone else you're seeing things before they come out publicly and but in terms of your poker games how does that look so basically just getting invited to the right games.

So it varies greatly if you're talking about the live versus the online arena. So I'll share both. When I lived in Vegas, it was knowing all of the floor managers in the poker rooms who could text you if a game was going. It was also all of the players who recreationally like to play for very large stakes, being friends with them and being someone they like to play with so that they would save you a seat. I built an app that scraped the dashboard that the casinos use to share what games are running. And so I'd find out if a new high stakes game was running. And I had plotted my course so that I could get there in 10 minutes from my bed. So that, hey, like these seats fill very quickly, and I need to be the first one

there. So you know, speedwalking there. And that same I was like, 2am or something. Yeah, there's there's an aspect to the higher you're playing, the more you're on call, because these games completely run around a very small group of people. And essentially, you play when they want to play. And you know, hey, they might go on for 1216 hours. And if you aren't there for minute one, you're not going to get a seat. So it's it's it's useful to be on call should you want to get in there. You know, your hourly rate is very dynamic in that way. In the online arena, the same concept applies in that speed kills, as I like to say, is like the fastest person generally gets the seat. It's like a game of musical chairs. And the site that I currently play on, most sites have waiting

lists. So you can wait in line. This site is a little bit different in that there are no waiting lists. And so you're waiting for someone to get up. And the first person who clicks on the seat gets the seat. And so it's anticipating when someone is going to leave and then furiously clicking on the seat, trying to maximize your opportunity of getting it when it opens up. And that becomes because game selection is the most important thing. Like if you are a decent poker player,

when you play an amazing poker games, you're going to do great. And if you're an amazing poker player and you play in really tough games, you're not going to have great results. That finding ways to be faster and the way you're faster is I use this analogy of a surfer. And that, you know, if you want to surf a really big wave, you're paddling for a long time, and you're ready before the wave comes. It's anticipating when these opportunities are going to come up, so that when these conditions emerge, you can be the first one to strike. Although if you're surfing a really, really big wave, you get towed in by a jet ski.

But we'll argue that another day. And so next, strategy. So talk through strategy. We could spend 70 days in a row, right? But high-level strategy. High-level is I approach strategies in everything in my life, as I think you'll see from a systems level. I think everything is a system. And so thinking about poker as a complex system with emergent behavior in an uncertain dynamic world has certain implications. And so I use kind of this straw man of the game theory

optimal player, which operates off of static models, when you really need to be thinking about how things evolve over time, as well as the second and third order effects of your decisions. So an example in poker, that's that's pretty simplistic, is I make a bluff, and my opponent sees that I make a bluff, I show some garbage hand, like eight, five offsuit, and I'm having me showing that bluff is going to cause my opponent to make an adjustment. And so before I make any move, I'm anticipating how my opponents are going to adjust. And I'm having a counter already in place to their adjustment so that anything that I do can never be considered in a vacuum. It's part of a sequence of plays with each of which has second and third order effects. And because

I'm playing with the same players every day for years, there's a lot of things that don't make sense on the surface, but make a ton of sense when you're when you're zooming out to this is an iterated game over years. And what you said, like you're willing to lose a skirmish or two to to win the overall battle. Absolutely. So you need to you need to be giving action in order to get action if you're never bluffing people are never going to make big calls against you but generally people aren't very good at estimating probabilities and so you can do things to create an impression of randomness and aggression that aren't actually in line with how you're actually playing right it's the difference between strategy and tactics that everyone can emulate your tactics, but they don't

understand the strategy that is driving those moves. And how do you think about these, I keep coming back to these 50 who are got to be just as smart as you or you think, or you are better than them? Like, to me, it's like, they know what you're trying to do, right? So it's like the game within the game is you're bluffing, they know you're trying to do. Right. So it's like the game within the game is you're bluffing. They know you're trying to bluff. So they're going to either dial it up or down based on what they think you're going to do. So it's a constant back and forth of like, which I think is in your paper of a faint within a faint within a faint. Just how do you conceptualize that? How do you think about that? Of of am I doing this for real? Right. It seems to me maybe it's not as complex as I'm thinking of.

Like, no, there's real information. And when you give that bluff, they're going to take some piece of that information. They're not just going to totally discount it, knowing that you know that they know. It's so complicated and nuanced. On average, I am making what I think is the best play for this hand. Like every street, every hand is an

opportunity to make the right decision. So if I think I have the best hand, I'm going to bet if I think I don't have the best hand, I'm going to fold. If I think that other person is going to fold, I'm going to bluff on average, where I think the opportunity is, is reorienting to these changing conditions to these adjustments that our opponents are making. So I, I love this concept of a half bluff. Let's say that I make a huge bluff on the river, and I have the nuts, my opponent doesn't see my hand. And so I know, hey, I had the nuts, I was just betting as I was supposed to, but in their mind, I could have been bluffing. So because I bet and don't show it, it's like in their mind, it could have been bluffing. And so because I bet and don't show it,

it's like in their mind, it counts as a half bluff. And so say I win a few of these hands in a row and I have it every time, but I don't show, in their mind, they're starting to get suspicious of me. And so even though I've been playing very snug in this small sample, I need to pull back anticipating they're going to look me up when I try to bluff. So it's not only what is happening, but it's your opponent's perception of what's happening and being one step ahead.

My favorite mental model for this is John Boyd's OODA loop. I think it's the best framework for decision making in a rapidly changing uncertain environment. So, you know, highly recommend those of you guys who aren't familiar with it to check it out. His conclusion, so John Boyd was looking particularly at fighter pilots. So how does one fighter pilot that looks pretty evenly matched win an outsize center of the time? And they found either the pilot is better to adapting

or they have hardware, you know, the plane that they're flying, that allows for faster, more nuanced adjustments. And that if you can reorient to these changing conditions, that you are adjusting faster and more accurately, what happens is your opponent, whether you're talking like warfare in the air or just mental combat and poker or investing that your counterparty is operating off of an outdated model of reality because they're adjusting to where you were before now, not where you are now. So that's my kind of abstract answer to your question is everyone is adjusting and anticipating,

but can I adjust and anticipate faster, more accurately? Which is like the, which I love that you're so confident. You're like these 50 best players in the world. Would you call them the best players in the world or whatever? 50 of the best players in the world. Right. And you're like, I'm, and they're all thinking the exact same thing that they're smarter than you. That's why they show up. Right. And that they can adapt faster. And you're saying, well, let's see, put your money on the table. Let's see who can adapt faster. And I think the key when things are pretty evenly matched, like these are players who are making very few mistakes, particularly strategically. There are days where I am not going to win because I'm not playing as my best self. And so I think the meta skill here on execution is this awareness of what is my current level of psychological capital? Does my mental game have an edge over these players? And I'm like,

how is my decision making compared to my baseline? And so being comfortable with I am not making great decisions in this moment for a number of reasons. It's better for me not to play, or I am really dialed in in this moment, everything I touch turns to gold, how can I ramp up the risk? How can I put more money in this into play? How can I increase up the risk? How can I put more money into play? How can I increase my position sizing? Because as I develop the sensitivity to what my edge is in this moment, I want to be able to dial that up or dial that back as I'm able to. And how do you think about it? Is it a zero-sum game, obviously? If not negative sum, is there a rake? Exactly. Yeah. So, but let's just call it zero sum game.

So long-term you might have zero expectancy, right? If all of those players adapt correctly over 10 years, 15 years, whatever, or do you need some of them to be net losers and new blood to come in? It's a ecosystem that depends upon new money and they're entering it because of the rake being taken out of it. And so generally the business model of a poker site is very focused on attracting recreational players. The site that I play on spends their entire marketing budget on Facebook ads, just trying to get new blood into the system because otherwise it's a bunch of piranhas. Right. But do you think

the piranhas are all just so are the piranhas eating all that new blood and they're basically even with each other? And that's the other thing which I bring up with some investing companies that do like exotic, you know, over the counter options with these banks and whatnot, like over 10 years, if you just keep taking advantage of them, you had better probabilities, you had better insight into what was going to happen. They're just going to stop trading with you. So it's kind of like a, the same thing here. Like if you just keep killing them over and over, they're going to, they're either going to run out of money or they're going to leave that game, right? I think it's a little bit more complicated than that. I said, I think making it clear,

hey, the edges here are very small. On a particular day, I only went 52 to 55% of the time. And so someone who's not a superior player can have superior results for a long time. I think the world is super noisy. There's so much luck, as Nassim Taleb likes to tell us. And people are generally inclined to fool themselves that their good results are due to their own skill and their bad results are due to bad luck. That being said, on average, I am not making money from the other professional players, but I can. There's a lot of, as I said, there's a lot of matchups where just certain player styles match up well against others. And I think, again, I like to describe this as I only play when I have an edge. And thus, every time I'm playing, I'm winning, where other players play when they don't have an edge. And so thus, they dissipate their edge. And actually, some of the largest losses come from professional players, because they aren't sensitive to how they're playing on that particular day.

They're like, hey, I have years of good results. And one day they show up and they just keep losing. And they're trapped in this narrative of I'm a winning player. I don't make bad decisions. And so these are the players who can, you know, wipe out their accounts completely blow up because they don't have good stops in place, or they don't realize that all the assumptions that they once made were no longer true. So I say like, as an investor, I think this ties into kind of my

personality there is I see lots of my friends have really outsized results. I don't think I'll ever have outlier outcomes, but I have basically zero chance of blowing up. I just have like small edges repeated many, many times. That's what I was going to ask if you kind of look at it from a like long vol and short vol trade, right? There might be some players are kind of selling options, right, of risking a lot in order to make a little bit and eventually they get called and they lose a huge pot or vice versa.

I'm just trying to sneak into as many pots as possible and i'm going to get some big outlier payouts so yeah that's a very good analogy um so wait so you're saying you're on more of the long ball option buying side of that and it's again not that simplistic but or not maybe you're an option seller let's see let's hear it so i i have to i have to stick to you know i'll stick to my lane as far as using poker and i hope that the analogy um you know comes across uh so i don't know what's going to happen when i show up on a particular day i set it up so that i'm never going to lose very much. Either I have a stop in place. I'm only playing in games where my edge is very clear.

I know where it's coming from. I know who I'm going after, but my returns are very, very lumpy. So about, I would say 80% of my returns in a given year come from like 20 days of playing. And so it's a very power law and it's like realizing all right conditions are very ripe today i'm gonna like cancel all my appointments like you know grab another coffee strap into my chair sort of thing that because

um most the time hey i'm ready to leave if like's not, it's not all that good. I think you said a lot of investing in poker success is this discipline that, hey, we see us as, hey, poker players play, investors invest, we're always looking for these excuses to get involved. I'm looking for excuses not to get involved, because there's always another game. But when I realize that, hey, like, you know, all the stars are aligned today, that's when I am like, putting everything I can, I'm playing as high stakes as I can, I'm playing as many tables, I can't play as many hours I can, because that hourly rate is so dynamic, these times where everything is aligned, I might be making 10 times more per hour as I am during normal times. And so every hour is multiplied by 10. So I said, I think it's a little bit of both in that I'm really limited in my downside, but I have this positive convexity where when things are really good, I really take advantage of those conditions. And how do you think about that as a, you're not officially a statistician or a quant, but kind of right up quant would say there's no such thing as hot streaks, right? It's just the statistical distribution showing up in certain spots.

And that has been, that has been debunked actually. So, I mean, just like, just like so many things coming out of psychology these days and Hey, I'm, I'm a psychology major. So I would know the hot hand not existing has been debunked. Hot hand is a thing. Anyone who's played sports know that is a thing. Because sports, investing, poker, these are all mental games happening by people. So hey, even if statistically, it all it all averages out the person shooting the shot is changing. And so if you're confident, you're operating from this unconscious confidence in a like inner game of tennis sense you're watching the seams instead of thinking about your footwork or i know you play a little bit of golf instead of thinking about whether your hips are in the right position you're just you know thinking about just thinking about hitting the

shot just swinging exactly um if you're feeling it if you're really dialed in if you're operating out of this sense of flow um if you're performing at a high level, you just can't help but have better results. And so it's both getting yourself into a position where you can perform well, but also when you recognize that you're performing well, can I play more? Can I can I can i maximize this rare time where everything is dialed in and yeah and i would agree right we've all most shot of basketball and right if you're nervous or even golfing if you're hitting a putt and there's money on the line you're nervous and you're gonna pull it or you might do something and you can see for sure a basketball player when they're loose they're just their arm flies if they're nervous it's going to tighten up so i agree with that and the

statisticians kind of cheat of like well if you took all those shots and did a monte carlo you would come up with this period where they hit 26 in a row right it's just statistics but as you can see from play as you can see from play to win i don't have a very strong opinion of most models whether they're economic or statistical i think that all of these static snapshots fail to capture most of the nuance. So when you're on this heater, can we call it a heater? What do you like to call it? Absolutely.

How do you do money management there? Do you have an actual, so then that comes back to your execution and your discipline. So you're not just like, this is great. I'm ramping up. Are you like Kelly betting or right? What kind of metric are you using in order to size your bets and keep your bankroll alive? I don't think there's an equation that captures is better than Kelly

criterion or essentially the larger my edge in the moment, I don't think there's an equation that captures this better than Kelly criterion, or essentially the larger my edge in the moment, the more that I'm trying to risk larger percentage of my bankroll. So the levers on position sizing in poker are, I can, you know, it's win rate times number of tables times average pot. And so, Hey win rate, I if I'm determining, hey, I'm on a heater, my average win rate is higher, either hey, the games are better, there's more fish in the water, so to say, or I'm really dialed in and making good decisions, whatever it is, my win rate is high, I can either try to move up in stakes. So play play bigger games or i can add more tables so where normally i wouldn't go after other professionals maybe if i see a spot i'll i'll play against professionals if i feel like

i have an edge there it's just like looking for ways to multiply that edge that already exists so by just putting more money to work so you're not literally like doing the math and okay i'm gonna move my average raise up like 1.2 it's all intuitive and just hey i know i my edge has gone up i'm gonna increase my overall exposure essentially yeah i mean while the you know rain man uh type stuff makes for great tv uh or movies that that's not really what happens inside anyone's head. It's very intuitive. Right. But in theory, you could have some software

or something that's calculating it for you and spitting out the optimal bet size. Theoretically, I don't know anyone who does that. Which brings up an excellent point. Is it possible ever that some of these are AI, that there's computers on the other side? It's definitely a concern. The best players are now not beating an AI.

So this is just an arms race that has been happening within poker. And the Carnegie Mellon papers are really good if anyone wants to dive deeper into the subject. But yeah, essentially, as we've seen in every field where there is an abundance of data that machine learning just becomes better and better and better. And so, you know, people thought that poker wasn't going to be solved because unlike chess or go, it's a game of incomplete information, but you know, here we are where it's moved from first limit poker and then heads up poker. And now you have no limit, um, six max poker. And, you know, the more players who are in the hand, the more branches on a decision tree, the harder the ai has converging on the optimal decision and there's still edge cases where occasionally um we'll you know players

gathering together to be like hey i think this player is a bot and we'll determine some bug in it and so we can get hey if we if we bet a certain size we can get the bot to go all in and we exploit this bot for a little bit a little while and so it's both an arms race. John Connor fights back. Exactly. It's an arms race with the sites on detection measures and anti detection measures. It's a arms race with players against the AI is like, hey, can we can we band together on these on these players help all you know, catch and report them together? It does seem like illegal. Is it against the site rules? Oh, of course of course yeah because

i mean you can't you can't beat them um they play a game theory optimal style which is it cannot be beat it might not be making the maximum but there's nothing you can do to beat it um so yeah it's something it's something that really concerns me in the long run, because just the incentives are in place that people building are going to beat over the long run people who are preventing the builds. So I do think it's kind of a matter of time for online poker, where the writing is on the wall. Sites can't prevent all bots um so yeah i that's

why i prefer kind of my my my let's say more blue ocean ecosystems where there's less money at stake these days because generally the bot creators are going after the largest games largest player pools there's some protection there and sites are getting better about detecting them. But yeah, they're taking money out of the ecosystem in general. And I do think that, hey, exponential growth as we've seen this past year is a very powerful phenomenon.

And that this is just an obvious thing where in everything we're experiencing, machine learning is growing exponentially. Exponentially in terms of the data sets, exponentially in the way that it's able to parse unstructured data, exponentially in the experience that it gains along the way. So yeah, it's definitely a factor. And so are you seeing it's like they've got the execution part down cold, right?

They're not going to make mistakes. But are they also making huge strides in the strategy part right is it like strategy that no one can anticipate because it's doing fractal or you know multi-dimensional strategy analysis it is that is a silver lining and that it does have an interesting evolving effect on the game so for for example, you know, a different game, Go, like no one had ever seen before and beat the masters, right? And so, yeah, moves that people had never seen before, and realize being able to deconstruct, to the best you can anthropomorphize here, like, what is the rationale driving these unknown

decisions, and the game advanced very very quickly based off of, hey, we didn't even know this was a possibility. And so this is something that we're seeing in poker, that I took the somewhat contrarian approach that I don't, that I think this is a bit of an evolutionary dead end. But along the way, by the way that players study these days is essentially plugging it in to these machine learning programs and seeing what the machine would do and trying to understand what is the difference between what I would do and then what the machine would do. The real answer is somewhere in the middle.

So the game has really converged on these best practices very quickly based upon these tools. Right. And that's a trick too. Even if you had some site that's like we verify it's human somehow, and that's foolproof, you could be sitting at home with the machine running, you know, next to you and telling you what to do. All right. That's interesting. I had a good idea for a new poker game. I was watching the volatility in Bitcoin, right? If you had a poker in Bitcoin, which I'm sure they probably play for somewhere, but in Bitcoin, and then it adds a new dimension, right? The pot is actually increasing, decreasing in value as you play the hand, which would add a new wrinkle of like, well, I got to get this pot quick because it might, the price might sell off, which brought me back to like, that's more like investing in trading

options or something, right? Like you're playing all the players, you're playing the perfect strategy, but the thing you're trying to capture is, is gyrating wildly back and forth, which makes it that much harder of a game. It's like four dimensional chess. I'm, yeah, I'm very interested in playing that. It reminded me of a bar. This is not quite the same old bar that I was was in Barcelona where all the prices are set by supply and demand. And so you're trying to create the optimal drinking strategy based on what drinks are undervalued. But I mean, yeah, certainly as we've seen this year where, hey, how long are fundamentals not going to matter? And volatility driving the day. I think it's easy to say what the right decision is in a vacuum,

but because the situation is so dynamic, the timing, timing is everything. Wanted to mention just real quick, like a lot of what you had in that paper made me think of a prop firm, a prop trading firm here in Chicago or wherever, like the Citadels, the Susquehannas, Peak Sixes, right? Like they're maximizing their opportunity. They're playing in blue oceans, right? They don't want to go fight any little edge they can find anywhere. They're going to put some money towards it. They're installing huge and sophisticated risk guardrails so they don't blow out like you're saying. And they're playing the game within the game, right? Whether that be microstructure, market microstructure or whatnot. And they're playing the players, they're identifying the players.

So I'll bring it just back to when you're taking that framework that you wrote in the paper and you do consulting as well, right? So how do you think about the whole concept just in terms of what you do with the consulting and advising people on life or business or whatnot? Sure. So yeah, my consultancy forcing function, we do what I call peak performance architecture. So we work with investors and other executives to help them install structures that allow them to make better decisions and perform at their optimal levels. And so some of the things that I do with my trading clients are, as you said, with the prop firms and making sure they have trading checklists that they're doing, decision journals where they have pre and post boredoms before they make any major moves, installing routines to start and end their workday that allow them to show up with

maximum energy, attention, presence, that type of thing, where these are things that I saw in poker that extend very well to investing that showing up as your best self, learning from every decision, approaching it very systemically, just generally leads to much better outcomes. And so what I love about what those firms are doing using poker as a learning tool is realizing that everything that we do is an investment, is a bet. Everything from the first thing we do when we wake up to what do we eat to what is the first site that we open up or the first thing that we do when we exit a call. When we show up, do we know the names that we're looking at? Do we know the conditions in the market that we're watching out for? Are we going to get sucked in to what the news

algorithmic vortex is serving us? All of these small micro bets that we make compound, multiply, and lead towards a difference between winning and rather pedestrian results. Some like old school traders like rolling over in his grave right now, right? Like, oh my God, I got to do all this work, right? Like, I just want to go drinking at the series and the board of trade and show up to work next day

and sling trades around and make some money. What got you there won't get you there. And, you know, hey, I hate to break it to you, but it's going to continue to get weirder. I said, I think a lot of things are in this red queen race where it's getting, you're having to run faster and faster just to run in place. And as you saw, I think the documentary, The Pit captures this so well, as you saw in your

experiences on the trading floor and Chicago, that, you know, those who don't evolve get died, right? You're, we're all running. Question is, are we predator or prey? Yeah. And then I'll come back to like football, right? Like everyone's sleeping in a hyperbolic chamber and, you know, Tom Brady's like injecting cauliflower juice in them or whatever he's doing. So it's like in order to keep an investor to think of yourself as a cognitive athlete. So what we're seeing in poker and even in chess is that the best players are training

as if they're going into the Olympics, working out for multiple hours a day, being very, very careful about their information diet, doing everything like, hey, when I sit at the table, I want to make sure I have the optimal posture so that I don't have energy leaks. I'm taking, taking calculated breaks. It's so there's all of these small adjustments that said that compound went over the course of a career over a lifetime lead to these outsized returns. And because if our job is to make good decisions, removing all the friction and barriers to making good decisions and making those bad decisions harder, right?

We make what we want to do easier, make what we don't want to do harder. And so what we're seeing in poker, we're seeing in chess, we're seeing in investing is that those who take the most stock of what can I do so that my life is supportive of making good decisions, whether that's being mentally ready, right, managing emotions, managing life outside of the work, you know, removing distractions type of thing, or just that, hey, our brain sits within our body, are we exercising? Are we eating right? Are we sleeping? Are we staying away from stressors? Are we seeing people we love, who are reminding us why we do this, rather than just making a marginal dollar, all of these things add up to results. And I said, that's really what I try to get across in play to win is you can be the best investor on paper and have really crappy results. If you don't think about the meta skills

of you are a person, you need to take care of your body, you need to take care of your mental being if you want to realize your full potential. So they're almost like micro skills instead of meta skills, right? Because you're saying like things down to your posture and what you eat. And so it's like incremental change and can lead to huge compounded results, right? What's the David Brailsford and the Sky Cycling team, have you ever read that piece? All of the 1% improvements that he made to turn around the British team from, yeah, diet and tire pressure. Although then he got accused of feeding them all performance enhancing drugs. So who knows what the real truth is but the paper was good um my impression is that my impression that everyone is that much

better with the incremental change as well i mean my impression is that everyone is taking performance enhancing drugs just not everyone's getting caught right is are there any trading and performance enhancing drugs? I think if there's one, it's probably modafinil. But I mean, modafinil is primarily for- I meant poker, but trading too, yeah. Yeah, for poker, it's probably Adderall is what people do, is like staying dialed in for a long period of time. I'm a little bit more, I don't want'll say boring there, I think that that type of stuff tends to be last mile. You know, hey, if I can solve my diet, exercise and sleep, I'm 99% of

the way there. And what I try to avoid is, I want to, I think of everything experimentally. So if I need this substance, if I need this outside thing, that becomes a crutch. And so when I'm playing poker, I don't have anything in my body, my my my diet, my sleep are completely controlled for like no caffeine, no sugar, it's like anything that could negatively affect my decision making is just a no. So I think that's, you know, hey, performance enhancing. But you know, I'm thinking very long timescales, right? If I'm like, okay, how can I perform optimally for this single Super Bowl type event, I'm pulling out all the stops, you know, that anything you do, even that's even like gray area. But if I'm talking like, how do I show up consistently every single day? And how can

I be really in tune with where am I now controlling for all these other variables? Right? I don't want to think about Oh, is my my playing badly because I didn't sleep well, or because I had a fight with my partner earlier, or because like, I'm feeling this existential angst, I don't I want to solve for all that stuff. So any anything that creeps into my mind or any any lack of decisionmaking ability is attributable to something else that's outside of my control. And you don't have kids yet. No. That's a whole new, that's going to be a whole new equation because it's hard to get that out of your head, all those.

But I'm coming back to how do you square, like, you still need the joy in it right like so if you make everything so like oh i gotta wake up at 5 45 and do this and go over here and make sure i don't have this like it becomes such a checklist that it might remove the joy from not just poker but from whatever you're doing of like right like i played football in college i only played uh two three years because i i lost the joy it was like i had to go run at 5 30 anymore like in high school you're playing with your buddies and it was all about the fun of the game. And then it became more of a job and you had to do all these things. You know, I was doing one tenth of what you're talking about. But to be that good, to get to that level, you had to increase your commitment, essentially. And it was like, it doesn't seem like as much fun. So how do you

square that of like, how do you keep the joy while being excellent? Can you, I guess, would be the question. I certainly believe you can. And I don't know if this will be a satisfying answer, but you choose to enjoy it. You choose, just like we choose to be happy, we choose the level of depth with which we explore everything. I said, I think our intelligence is only limited by our curiosity. So even if I'm doing something like washing the dishes, it's an opportunity to

practice being present, to be aware, to be curious about what's going on. And so even if I'm doing, going through the same rituals, going through the same checklist, I can be curious, how do things feel today? Is anything different? Is there anything that I could do to improve? But I think this is the infinite game is finding ways to stay in the game to keep it fresh to keep it interesting. And I said, I think that the only the only limiting factor to life's level of death is our willingness to pay attention to it. And so hey, anyone who, you know, loses touch with why they're doing it, get back in touch or pick something else. Because, you know,

the person who's having the most fun is the person who can't be beat. I think that's something that has been a really big part of my staying power in poker is, hey, I've been doing this damn game for 15 years, and I still have no idea what I'm doing. And I still love learning about it every day. And I still welcome the challenge of getting a little bit better. And if I can get like a little bit better every single day, I can just know that that score is going to take care of itself. But as soon as we let that light turn off, as soon as we stop being curious, as soon as we stop improving, as soon as we start coasting and thinking that we're entitled, that we deserve some sort of results, that's the path to

obsolescence. That's the slow death. And what, so you, are you a fan of Bryson DeChambeau? Because he kind of took this to the extreme, right? Of like, oh, I'm going to beat the game. I'm going to figure out the math. I'm going to figure out the proper eating. I'm going to put on all this weight.

Like he did all these incremental changes to improve his game. I'm not familiar with it, but it sounds like a great approach. Oh, yeah. He like put on 40 pounds of muscle, started driving the ball way further. You know, at the last U.S. Open, he's like, you know what? Everyone's trying to put the ball in the fairway. I'm going to go with driver. I'm going to miss half the fairways but i'm gonna be that much

further up that even though i'm hitting out of the rough so it's just a total game theory approach that we haven't really seen and yeah what i take away from that is if you want to have the best results you need to be willing to look incredibly stupid that hey if you're if you're if you're making the same trades as everyone else you're going to have the same results as everyone else. That in order to have outsized results, you need to be both contrary and right. And that means exploring. And that means trying things that, hey, if you control your downside, if you think of it as an experiment, hey, we're doing this to learn. This is how you find those blue oceans is through exploration. And, you know, said a lot

of people, whether it's within their mandate or their personality are just unwilling to look stupid. Yeah. And talk for a second. Like, I feel like you have, you know, your article is called play to win. You said you're trying to win the game. I feel like some of these coaching strategy type things are more about, especially in golf, right? Hey, do the process and let the results take care of themselves. So do you kind of draw the line there? Like, no, the process is to win, not just, you know, I think it might help in a physical sport of like, Hey, don't worry about the result of that shot.

As long as your process was all clean and good and you, you did what you wanted to the result, you know, and that in poker too, though, the result, maybe they got lucky or maybe something happened. Don't let that throw you off your process. I don't know if there's a question there, but just is it more about are you saying stick to a process and you're going to be healthier and the outcomes will come as they will or like, no, create a process in order to win? Both. I don't think those two are mutually exclusive.

So inherent to having the process is regularly reflecting and checking in, is this process leading me to where I want to go? Obviously, if we just keep mindlessly doing the same thing, we're going to get off track from this North Star. So yeah, I, I'm following a process, but I'm always iterating on this process. And there come regular periods in my life, where I'm willing to just throw everything away and start from scratch and pick a new course. But I'm not, I'm not, I'm not thinking about that every day,

right? I'm either like all the way on confident, or I'm all the way on critical, or when I'm playing, I believe that I'm the best player at the table. And everything that I do is the right decision. And then the second that I hop off the table, I am incredibly critical and assume that I was messing up all the time that I was making all these poor decisions. And my opportunity to identify these bugs in my own thinking to improve myself. So yeah, I think that process is incredibly important. But it's also important not to become myopically focused on that. You think about, hey, am I on the most direct path to where I want to be? And that usually comes from a lack of vision, a lack of understanding where we're going,

what are we really trying to accomplish here? All right, let's just talk quickly, what how you view the investing world. So kind of paraphrase to everything we've talked about? Or do you kind of tweak your the concept a little bit? I'm still learning, man. I'm just an egg. I said, I do approach everything from this lens of expected value and bets, and that I'm trying to capture maximum upside with exposure to minimum downside. And that's generally, you know, my approach to investing. I think my edge, if there is any in this investing world is, I mean, who knows if I have one at this point is, is playing the player. So I love trying to, trying to invest in people. Is there someone

who I trust? Is there someone who, especially when the chips are down, because the chips are going to be down at some point, is this someone who I think is going to run with it for a long enough time frame necessary to harvest the gains? Is this someone who's thinking about ways to get better when they're in the shower, when they're asleep in the middle of the night? Is this an obsession for them? Or is this just a way to make a living? I don't plan. I don't, I don't. But you mean, is that like an Elon Musk and running a company? Or you're saying like a hedge fund manager? I'm like, who cares about the track record? Like if you're believing that they're doing their best to deliver day in day out, you're going to go with them.

I'm thinking as an LP when I'm when I'm looking at managers. I said, I think when we're looking at individual executors and that's where market industry model understanding come into a lot more play. And I said, I don't pretend to have an edge there but if I can pick the right horse and trust them to find these people, that's what I'm aiming for. And, you know, obviously just like from a personal portfolio allocation perspective, right?

Thinking about what we're optimizing for, if we were optimizing for maximum profit, we might be doing things a little bit differently. I'm optimizing for like lack of regret, like being able to like put my head on the pillow at night, sleep well, not be stressed, know that all the most important things are going up and to the right. And so I'm willing to leave a little bit of expected value on the table for

less volatility, for more peace of mind. And so that, that affects like, you know, what I bet in and my sizing and level of correlations on things. And at the end of the day, just trying to stick to what I know. Generally, that's within poker and that's within people who I have this long range of experience of. I've shown that, hey, this is an outlier person who's going on to great things. I would love to get on the ground floor of whatever they're doing. The two things I want, we just recorded yesterday, but it's actually going to be

released a week after this pod, but with Wayne Himmelsine, and he was talking about how he approaches the client and building the models. And he said, you know, and I, the fittest model is the one we go. And I was like, hold on fittest model. So he's optimizing for the least likely to fail, right? Instead of the most profit or everything we just talked about it's okay i want the fittest in terms of the most likely to survive yeah and then i also wanted to say like so do you doing any of this robin hood uh robin hood or like trading because for you right like even in the online poker world, insanely hard to get information, like you're in the top 1% of people available,

able to get information from screen names and from that intuition you talked about. But there's not big, huge corporations with infinite assets and computing power, like fighting against you there, right? Well, maybe there is. But as far as we know, there's not. If you're just an option trader, retail option trader, right? You have all these huge forces trading against you. So I was wondering if you ever think about that, or you've sidestepped that market and be like, I don't have any information here, so I'm just not going to play. I don't want to be retail on anything that I do. Right. Retail is not necessarily a bad word. Hey, they all did pretty well in this last bump up.

But yeah, it's like, but how do you do that? Because you don't have any edge? Because you don't have any information? The level of attention and experience that I would need in order to be confident in my level of edge there. We'll talk again in a couple of decades and we'll see if I get there. I'm really big on education is that I think my edge in any game or any pursuit in life is that I tend to get better faster. I'm all about compounding and everything. And hey, I've been studying investors either for the reading,

working directly with some of the most successful investors watching from the sidelines of the market, having tiny bits of skin in the game, just enough to like actually feel the pain and realize that, hey, all my thoughts about emotions, like sometimes I can go against them when things are on the line. I am moving more and more into becoming the professional investor that I emulate, that I admire, that I want myself to be. But man, I mean, I'm thinking on like a lifetime timescale. I'm still, I have a lifetime of learning and capital appreciation ahead of me. I don't feel this time scarcity. I hate to throw everyone into this box of the Robin Hood, gambling, just in it for fun and community. You said, I'm here to win,

and I'm playing the super, super long game. And hey, times are crazy right now. I think everyone agree with that. But times are going to be crazy for a long time. There's going to be lots of fat pitches coming down the plate. I expect my surface area of opportunities as I continue to grow my skill set and my network to only exponentially multiply. So I'm trying to think like, how can I continue to grow and how can I put myself in the position that I can't lose, that I'm not gambling, that I'm not retail? Because I said, I'm either playing to win or I'm not playing.

There's no point otherwise. Which is insane, right, to hear you say that. Because here you are, a professional, you gamble for a living. So no way I'm going to gamble with my investment. So it's like vice versa. There's other people don't gamble for a living. So they're going to gamble with their investments. It's interesting. Comment on society as a whole um great any other thoughts on the overall paper approach for we wrap up no i think i'm good yeah i think we've covered a lot so a few quick fire favorites here for you um favorite poker hand

you're gonna say it's way more nuanced so i know that that could be my answer to every question uh yeah aces obviously i i don't have i think it's very unlucky to be superstitious as they say um let's say i think a more interesting question is what is a underrated poker hand and i think you know most amateurs don't realize that ace five suited is a very underrated poker hand because it's the hand that has the most it has the most equity against premiums premiums being jacks plus ace king where it has 30 equity against those hands and so a lot of professionals treat ace five as aces in order to keep their ranges balanced i like it along those lines can you give one piece of advice which again it's way more nuanced than that but for the

amateur poker player to help win his neighborhood kitchen table game, what would be one quick piece of advice? Yes. So, I mean, the one I shared before, I think is a good one. Figure out what your opponents are trying to get you to do and do the opposite. You know, understand their perception of how things are going, you know, understand what they're thinking, what they're trying to get you to do. Another general one, get through to call, don't call. Yeah, exactly. Another general one, which I think also applies to life is to be tight, but aggressive, be very particular in discerning the situations that you get involved. But once you do pursue them very aggressively. In a forcing function context, when I'm working with clients, I advise them more wood behind fewer arrows.

Take all the things that you're paying attention to and draw a line through half of them. Take all of your open projects, draw a line through half of them. Direct more of your energy and attention towards fewer objects of higher average importance. I like it. Favorite poker room? Physical? And I think because there are trade-offs here. So I used to spend the summers in Vegas. I like the Aria room a lot in terms of setup. The biggest games tend to be in the Bellagio, but it's, I think it's a little bit,

a little bit cramped in there. Not as fun to play. I think the Wynn is pretty high up there as well. You get a lot of people wandering in golf. So it's like one of the rare places in the poker world where the games can be best at eight in the morning. Those are all fun places in Vegas. I don't play live as much anymore. I was playing in Atlantic City. I think Borgata is a pretty good room as well. I wanted something like Brooklyn, Teddy KGB type place. Oh, I mean, hey, if anyone's listening and you know, you're looking for, you know, a semi professional person who likes talking about poker on investment podcasts, and you know, I'm happy to take a seat. I'm guessing that my favorite poker room is a room that I don't know about yet uh-huh i love it uh favorite poker movie that we just mentioned one i don't think there's i think there's rounders and a very very very large gap

between every other movie um i think i would put an honorable mention for molly's game recently yeah um and yeah maybe the dozens of others that are not even worth mentioning um oh and i forgot to ask you on the poker room that whole thing with the guy in the Yeah. And yeah, maybe the dozens of others that are not even worth mentioning. Oh, and I forgot to ask you on the poker room, that whole thing with the guy in the Sacramento poker room. Was it Sacramento of the guy who like couldn't lose and people were accusing him? What's your take on all that? Oh, so it was it was very clear and proven that he was cheating. So I have to get a little bit of context for this because, hey, don't want to throw the baby out of the bathwater. What was interesting is he was using

kind of bone induction to communicate with a confederate who, so these, in these televised games, they use RFID cards, which relays the cards to the televised stream overlay that shows, hey, what cards players have. And so they had a confederate who was monitoring the cameras, who was communicating via this bone induction tool that was hidden between the hat. And so he literally knew the cards that other players had. Wait, what's a bone induction?

It's like rattling his skull? Yeah, I'm going to look really dumb if i try to explain it i mean i think if i remember correctly it's some sort of um yeah some sort of vibration um i'm gonna have to look it up i'm really down there and for a while they thought he was just looking in his lap at his phone right but they were like okay it's more complex than that thank goodness yep yep so i mean imagine it'd be very hard to lose if you knew what other players had and then he was terrible at the meta game because he like won so much that it brought attention to himself yep most um let's most things of this nature come down because people are too

greedy so hey had he been a little bit less, maybe you would have got away with it for longer. And that was the primary way that people proved it. It was just statistically, his win rate was so high, it was like 20 standard deviations beyond the mean, it was just impossible. Plus, there were a couple times where the cards had a defect, where it was the overlay was showing a different card than what the player actually had and so he was playing based off of the overlay it made some pretty funny errors so yeah i mean these situations are so rare within the poker world but when they do yeah they quite create quite a scam and he was like talking smack that he was so good too right like come on just be humble ego and greed it's uh you know hubris is our great downfall always.

Favorite poker book? Poker book. I have to give a shout out to a recent book that has come out by Marina Konnikova called The Biggest Bluff. You know, what I love about this book, so Maria is a psychologist by background where I'm very armchair psychologist, she actually studied PhD psychology, so came in with a better understanding than just about everyone about how bad we are about making decisions, how we just our lives are a life of bias, and fooling ourselves into thinking that we're great. And so she thought, hey, this poker thing is going to be a great proving ground. And starting off from complete zero, I'd never played before, worked with a coach and other mentors to improve her game through practice. And this is sort of an exploration of overcoming her

own bias that knowing the biases doesn't mean that you aren't going to act upon them anyway. So I think it's a great introduction for someone who's new, or in my sense, I took things away from it, old to poker to think about how to make decisions better and how to be the observer of our own decision making process. So what were her findings? That even poker players are terrible decision makers? Like it's a human trait or did she find that they're better at it? had she was able to overcome and improve this skill over time essentially as i like to say by getting punched in the mouth enough times by realizing oh that was a really dumb thing that i did or oh i let that guy get under my skin or oh i i like you know didn't want to do anything dumb on tv so i played a little bit more tight. Needing to observe self through mistaken experience in order to create these new connections. I said, it's like rewarding yourself for catching these bugs in the software in order to fix them.

My favorite was, I haven't read a lot of them, but the one was the professor, the banker and the suicide. That's a lovely one as well. Yeah, because it gets into the biggest games are generally with people you've never heard of. Where in this book, you know, Andy still plays, you know, a very, very wealthy, let's say, banker. You know, someone who made a lot of money from from oil markets shows up and said, Hey, I want to play the biggest game that anyone's ever played against the best players just to challenge themselves. And he actually got pretty good pretty quick. And the what you understand is that he had a bit of an advantage is that the stakes were so large, that everyone was so uncomfortable. Yeah, that was has a number that they stopped making bad decisions. That was his game theory went right that he was like, I'm gonna make was so uncomfortable. Everyone has a number that they stopped making bad decisions.

That was his game theory win, right? That he was like, I'm going to make it so uncomfortable with so much money that's still relatively small for me. But right then they banded together to make it less painful for themselves and started to win, right?

But that was cool. He had a buzzer to tell him to wait until his buzzer went off and all that stuff. Yeah, I would give a honorable mention to fortune's formula so um this is the book with uh claude shannon and john kelly um not a book about this is a book more about gambling and bets than poker but this is this is kind of the emergent monsters in there some lobsters in there too. That's a great book. Oh yeah, it's a wonderful read. So talking about trying to beat Vegas through blackjack and roulette

and the notion of telecriteria and how do you size your bets. And you know, this, you know, Thorpe leading to like options pricing and all that stuff. It's sort of like the history of risk and pricing your edge. So that's a fun one as well. Agreed. We've written that stuff. It's sort of like the history of risk and pricing your edge. So that's a fun one as well. Agreed. We've written that up.

We'll put that in the show notes. We did a little book review on the blog once on that. And lastly, favorite Star Wars character? I think I'd have to go with Obi-Wan. I tend to resonate with the teacher mentor character because maybe that's how I like to see myself as a guide, someone who's going to show where the holes are in the ground so that someone else doesn't step in them. And I think that there's a lot of leverage

in mentorship and guiding. And so I think he has a underappreciated role, even if, hey, Anakin becomes, you know, he goes over the dark side, even if the results didn't turn out so well. Still a pretty good process, right? You can only's it's hard to know how much nature versus nurture was that was that stock there um i thought you're gonna go with han solo because he won the millennium falcon playing cards their star wars universe version of poker's sabic where the cards in the middle of the hand oh yeah i i if if i were still in this metagame form of my life, that I'm trying to give an outside perception of who I am, that's different who I am, I would certainly say Han Solo, because I want everyone to think that I'm the reckless gambler who's betting the entire

mission on the turn of a card. Never tell me the odds. Yeah, exactly. Awesome. This has been fun, Chris. Thanks so much for joining us. We'll put a form function and all the contact info in the show notes. And we'll talk to you soon. Awesome, Jeff. Yeah, thank you so much for having me. It's a lovely conversation. Appreciate the opportunity and being such a great conversational partner. Awesome. We'll look you up next time we're in Austin or New York.

Please do. All right. Thank you. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel. Follow us on Twitter at RCM Alts and visit our website to read our blog or subscribe to our newsletter at rcmalts.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments. We'd love to hear from you. Thank you.