Poker & Financial Understanding
Similar In Surprising Ways: Can You Block Out The Noise?
TLDR; Poker and finance have similarities. Both seems simple, the theory is far more complicated than the general population may believe. Both are subject to bias and incomplete understanding, which can lead to decision-making problems, on the felt , because you are playing against people like Kevin, who will not systematically make the same mistake. This happens in real life, too, because carriers have full command of the theory and then have to deal with the nuances of regulations and commercial reality.
If I Could Change The World (I Can’t)
Crazy part is that many, many people can actually understand, play and think through the logic of poker. They are far superior to me, I have zero problem in admitting this, some have not graduated from high school. And yet, people discard this logic, where they are superior to me, entirely, when it comes to understanding money, because they believe it is entirely different. They have been persuaded by the underqualified, the underinformed, not seen an element that exists (“it’s not fair there’s a Medicare Late Enrollment Penalty”).
This happens in many walks of life, that your personal experience/expertise will allow you to understand the articles this newsletter, as long as you don’t infuse false narratives which exists everywhere, in everyday financial information. I read and watch tons of articles, just to observe, but I very usually conclude, “this is fundamentally misguided,” or “you skipped steps or missed something vital.” Pity is the wrong word, empathy for the challenge is more appropriate, unless you believe that I am serving my own end in advance of yours [in which case you are instantly excommunicated].
Poker: probabilities dominate the understanding, but it is not the only. The probabilities change through time, a new card appears, and depending on the payouts for the specific instance, the entire strategy may need to change. On the video, there are specific topics that we didn’t discuss because we didn’t have 10 hours, you would have to research the Independent Chip Model (ICM) yourself.
Finance: probabilities dominate the understanding, but it is not the only. The probabilities change through time. The difference here is that the probabilities will change, but:
- Probabilities may be different for your situation. Example: Mr Perfect’s thought about health insurance will be, and should be, much different from Mr Sickalot.
- Probabilities in financial markets, and changes to financial products will change without you getting a memo. No one said that each node occurs at equal time periods from each other, whether that is hour (for day traders even shorter), day, year, month, whatever. At certain junctures the time between each ‘branch’ can occur very quickly, or slowly. No one will tell you this, you need to recognize this yourself, which is why ‘set it and forget’ cannot be correct. Simply cannot be the case, and now you can understand why I don’t really study articles that say “Stocks To Own Forever.” No wonder I use this image, a lot.
Poker: poker hobbyists [me] might say they are ‘expert.’ Nope, I already knew that poker is a mere hobby for very small amounts of actual money. Real money? Haha, I have no interest in playing against Kevin or math PhDs in Thailand where the cost of living is a fraction of mine.
Finance: don’t get me started, this Newsletter is shedding a small part of the vast number of details we consider and discuss, running in the background, prior to making any suggestion to any person.
Poker: If your image of a poker player is a riverboat gambler with boots and a holster, think again: Keven graduated from the University of Chicago as an undergraduate, and he is not alone in that regard. In part of the video, he stated from a certain point, the extra details can be disregarded, and that even pros that he coaches add extra details that they should not.
Finance: Fees in products? Yes. Complications and controversy? Yes. Does it matter, if that product or guidance serve the function that fits your situation? Probably not. All the controversy over Medicare Advantage? Still has an out of pocket maximum which is the vital point. Annuities are bad due to fees? Some annuities guarantee lifetime income that will not expire, a feature your holdings in financial markets cannot guarantee, even if that is the implied meaning you see on advertisements.