Are you playing the right game?
We've all seen this scene. We're on the bridge of the Enterprise. Kirk, Spock and Bones are debating how to combat the evil Enuresis. Every move they make is countered effectively by the Enuresis.
Kirk walks away and he looks up, snaps his fingers:
“We're playing the wrong game. (Dramatic pause) They're playing chess. (Dramatic pause) Spock, we need to play (pause again) Poker.” Just to prove his point Kirk shoots a crewman wearing a red shirt.
Kirk gets on the communicator and mutters some pseudo-science about self-destruct making that entire area of space uninhabitable for a bazillion years. The bad guys disappear at warp 7.
My game is five card Stud Poker. One card face down, four cards face up. I know how to play it; I understand the rules and have a good feel for the odds. I recently got talked into a game of Texas Holdem. I lost my butt. I was playing someone else’s game.
I spent my professional life as a computer programmer. I was good! I eventually worked my way into project leadership. Then I was promoted up one more level. I sucked. I did not understand the political ramifications of that job. I fired myself and went back to the technical side. The most dangerous part of our personal makeup is our ego. If I can bring in a project, why can’t I be a manager? I didn’t have the tools and in actuality I didn’t care to develop them. As a project lead – I’m playing my game. As a manager I’m playing someone else’s game.
Never throw good money after bad.
I’ve got a pair of threes, one of which is my hole card. He just paired up a four. I still have two more cards coming; I have a good chance at two pair or three of a kind. After all I have 10 bazillion already in the pot, what’s another bazillion. This is called losing. You are thinking like a loser. You are beaten on the board. Throw them in. This is one of the hardest things for a poker player to learn to do. Once in a while you might pull a bluff off. Only try it once in a long while. How does this apply to real life?
As real estate crumbles, many people are getting caught in this one. “Buy a house with nothing down.” Real Estate is a loser-proof investment. If things get tight you can easily flip it, take the profit and buy a new house for cash. Well, the bottom fell out of the housing market. People are living in houses that they cannot afford, but cannot flip. So now you have the husband and SO working, the kids are selling newspapers on street corners, all to pay the mortgage on a loan that is more money than the house is worth. If you are sitting in a “lose-lose” situation, get the heck out.
This does not have to apply to money only. Many years ago, when I was in college I found myself in a difficult situation. I was taking four courses that semester. Lets talk about two of them, COBOL and Intermediate Accounting. Intermediate Accounting was kicking my butt. I was spending endless hours studying and fighting for a “C”. I wandered into the computer lab about once a week and got my COBOL program done. I realized something – I was not an accountant. I would never be one. However programming came as easy to me as chewing gum. I dropped intermediate accounting. My life improved. I stopped spending good energy after bad. The simile worked.
My friend when you find yourself in this situation, no matter what the medium you are spending, time, money or whatever, you are throwing good money after bad. Which brings us to the next Poker Truism:
Never gamble with money that you cannot afford to lose.
Gambling is by nature risky, that’s why it’s called gambling. There are, however some people who tell you that Poker is not gambling. There are some people who are convinced that playing Russian roulette is not gambling.
When you are in any situation where your fortune is dependent on cards, dice or the stock market – you are gambling.
So I put all my money into the stock market. Dot-Coms cannot fail. Well guess what. They failed. People lost a fortune. Well, lets put our money into real estate – land never goes down. Well guess what. It went down. I’m not saying, “Move into a cave and shoot the next person who walks by” Some folks made a lot of money on dot-coms. Some made a fortune flipping homes. B U T – it was treated as an investment. Let me explain what an investment is. An investment is a nice word for gambling. Stockbrokers are bookies. I don’t know a nicer way to say it. If you raid your bank account because you got a tip on a stock that “can’t lost” then guess what. If it does down, you are now broke. You can no longer make the payments on that house you could not afford. A corollary to this law is:
Know when to walk away from the game
I have an unbeatable method for playing roulette. It cannot lose … well as long as 0 or 00 don’t come up very often. 0 and 00 are the green slots. I’m not going to divulge my strategy because when you use it and lose your shirt, I don’t want to be sued, but getting back to my story. A few years ago my wife and I took a few days in Vegas. In the plane I explained the plan to my wife. We got off of the plane, took a cab to the hotel and checked into the room. I went into the casino and walked, confidently, over to a roulette table. Played my method. First spin – Green – Double Zero. OK, I might as well get the losing spins out of my system. Second spin, time to make some money – Green again. That’s two greens in a row. Howie (That’s me), the roulette gods have decided that you aren’t going to make any money at these here tables. I walked away from the table and found the nickel slots.
I’ve forgotten the methodology but there are 2 greens out of 38 slots (?) that equal 1/19 = .053. Having two in a row, as I remember is .053 * .053 = approximately .003 or this will happen three times in every thousand spins.
I can think of two ways of dealing with this. One way is looking at the odds and estimating the odds of getting three greens in a row approach one in 10,000, go for it. Another way is “It ain’t my night” and walking way. I walked away. Probabilities – or odds – only work in the long run! As an aside, at the roulette table there is a board where they post the results of the last 20 or so spins. You, being the wise gambler see that the number 17 hasn’t hit in the last 20 or so spins. It can’t lose – or can it? If that concept worked would the casino post those numbers?