Bloggers On The Rail – Guest Post: BWoP

Posted by AlCantHang | Filed under Bloggers on the Rail

BWoP or Black Window of Poker or just plain CK. She’s known by many different names but also known for her skills at the non-HE games. She made the move from NYC to crazy world of Las Vegas to take advantage of the schooling fish in town for the World Series of Poker. She even survived an insane idea of driving across country to get out there.

One of the smartest bloggers out there, she brings you a unique way to look at your poker game.

Poker as an Investment Strategy
by BWoP

I’m not an investment advisor, nor am I an expert on cash game strategy. But given the fact that I was familiar with basic investment strategies before I started playing poker, I realized that I needed to start treating poker just like an investment. In the course of thinking about poker in this manner, this article was born.

This is the way that I like to think about my cash game strategy, relative to my long-term profitability goals.

1. Hand Selection – Maintain a Balanced Portfolio. In the course of a session, you will be dealt some blue chip hands (A-A, K-K, Q-Q, A-K), some incredibly speculative hands (9-2 and any lower card with a 2) and whole lot of hands somewhere in the middle. Smart investors do a good job of allocating portions of their portfolio across this spectrum. But each investor has to weigh several factors in creating this balance.

a. Market conditions. In times of severe market distress, sometimes you just have to rely on the stability of the blue chip stocks. If you are sitting at a table with a bunch of loose players, this approximates a market volatility situation. The more you rely on your blue chip stocks in these situations, the less volatility you will encounter. You’ve all heard the adage, "Play the opposite of the table." Similarly, when market conditions are more stable (you are sitting at a table full of tighty rocks), you can loosen up a bit and take some chances on some more speculative hands. The other thing that you can do, if market conditions aren’t optimal, is find a place where the conditions are better. Too often I’ve sat at tables where the action wasn’t good, or where I just wasn’t feeling like anything was going to happen. In most places where I play, I can easily move to another table.

b. Risk tolerance. Each investor has his / her own level of risk tolerance. If you are an extreme risk taker, you will naturally be more inclined to invest in a higher percentage of speculative stocks (start-up companies and the like). Some investments are significantly riskier than others. Of course, regardless of what you invest in, you are taking a risk (unless you put everything into a low interest-bearing savings account or a CD), but increased reliance on speculative stocks will eat into your bankroll quickly unless you are a smart investor. Nobody can afford to be both risky and reckless.

c. Diversification. Investment advisors will tell you to diversify. That way, you are less likely to fall victim to an isolated market blip. In the poker world, you need to diversify your play. If you are always a tighty rock, relying on the premium hands, you become vulnerable to smart players who can put you on a hand quickly. If you are constantly switching gears, you won’t be caught as often by someone who is just dying to crack your A-A with 7-8o.

2. Post-Flop Play – Using Market Information to Your Advantage. Once you have decided to make a particular investment, your decisions aren’t over. In fact, once you have put your money into the market (i.e., decided to play a hand), it is vital that you continue to monitor the status of your investment. There are several things to keep in mind.

a. Buy low / sell high. This is one of the fundamentals of investing. Many novice players fail to recognize the significance of managing pot and bet sizes. If you are drawing, what is the best way to buy the next card for the right price? Does that mean leading out as a blocker bet? Does that mean check-raising to get a free turn card? You want to minimize your chips at risk by buying cards for the lowest possible cost, without tipping off players that you are trying to draw out. At the same time, when you have a monster hand, you want to be able to sell that for the highest possible price. What is the best way to get someone to chase a draw, without giving someone the right odds to draw against you? How do you pick the right size for a value bet? If you recall from this past season of High Stakes Poker, Jamie Gold missed a number of huge value bets on the river, all of which were in situations where he probably would have gotten called. You would be surprised at the number of people who will pay you off. At the right price. The trick is to give your opponents the impression that they are the ones who are coming out on the better side of the deal.

b. Pay attention to trends in the market. Savvy investors understand how to time their decisions based on market conditions. This is a corollary point to 1.a. above. I see too many players paying attention to their own cards, rather than what everyone else around them is doing. Ignoring your opponents’ actions is just as bad as throwing all of your money into a company’s stock and letting it sit there for 45=2 0years without ever checking in to see how it’s doing. Most companies aren’t consistently profitable over that long of a time period. Neither will you if you don’t keep track of what’s going on around you. Know how each person at your table is playing. Recognize when a change in the action has affected your opponents. The top players in the world can beat a game without even looking at their hole cards. It is because they are paying attention and reacting accordingly.

3. Evaluating Your Session – Monitor Your P&L Statement Closely for Trends. Tracking your profit and loss statement will not only provide you with a means of evaluating your ROI (return on investment), but it can also provide insight into trends in your play.

a. Monitor your exit timing. How many times have you looked back and said, "Well, if I would have gotten up from the table after that hand, I would have been up $xxx dollars. Instead, I only ended up with $xxx." You need to think about optimizing when to get up from the table, even if you think you *might* be able to make more money. Some friends of mine employ the "rack and run" policy. The "rack and run policy": once you are up a rack, get up and leave. Lock in your profits when you have them. You can always re-enter the game at the initial buy-in. Also, once you have built up a nice c hip stack, those around you may develop chip envy and come chasing after you. It is often difficult to tell when you have reached a tipping point in your investment (i.e., when profitability starts to decline instead of increase), so be cognizant of the impact on your overall profitability any time you are having a winning session and just aren’t sure when to get up from the table. As a corollary point, you need to know when to get up from a losing session. Employ stop-loss measures. Chasing losses, just like sitting around in an investment that is going nowhere, will just put you deeper into the hole.

b. Take a long-term view. Don’t be disappointed with slow and steady growth. More often than not, your investments will yield moderate growth, rather than a big, quick score. Recognize that consistent profitability will serve you better in the long run than strings of volatile sessions (up $500 one day, lose $500 the next day). Most pros will tell you that you need to treat poker as one long game, and that requires thinking beyond just what you did last night at the tables. Similarly, avoid being results oriented (which is a very short-term view). Just because you didn’t play a particular hand, but would have flopped a monster, it doesn’t mean that you should have been playing that hand in the first place. Think about the impact of playing that hand 100 times over the next two weeks. Do you think you20are going to flop the monster that often to make it worthwhile? Probably not.

c. Sometimes Enron happens. In case you didn’t follow the story, Enron was one of the world’s leading companies in, among other things, electricity and natural gas. It was considered a great company to work for, and its stock performed consistently well. In 2001, several accounting irregularities were discovered, and the company filed for bankruptcy. Nobody saw this coming. There will be days when your monster hands go down in flames. There will be days when you suffer beats of epic proportion – one outers happen. Enron happens to everyone. But if you keep your head about you, you can get back into the game without trepidation or anger. Just like the savviest of investors, putting their money to work for them regardless of what happened in the past. There must be an indifference in your attitude. Sure, the money matters, but it can’t matter that much. Sure, your pride matters, but it can’t matter that much. Keep your head about you, and look for the next good opportunity that comes along.

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