Hello all,
It’s been a long time since the last newsletter dropped. I haven’t been sitting idle though. Unfortunately, all that I wrote has been either monstrous (I am still trying to edit a 7000 word ‘on work’ piece that I hope to send soon in some shape or form) or have been completely random musings that belong more in the category of private collection. I’ve also been trying to write some short stories which are sputtering slowly as they tend to do. In any case, time to feed this beast.
Before we jump in, I just wanted to say that 2021 in many ways has been worse because of the ‘we’re back to square one’ effect for me. I was optimistically hoping for the second half of 2021 to be the time when things went back to a semblance of normalcy. But we have new variants, new waves, new restrictions and the same old work from home which is turning into a kind of a grind, especially with travel restrictions and such. But I am really keeping my fingers crossed for light at end of the 2021 tunnel.
How not to play roulette
I can be pretty stupid at times. I’ve come to accept that despite the fact that my entire mental model of being something in the world was shaped to being at least above the average, ideally in a top quartile. I have often said stupid things that make no sense, I have struggled always with how to approach cases in B school. I still don’t fully grasp the politics of work and depending on the group of people and topic, sometimes I forget how small talk even works and how and what I am going to say to not just be a tree in this conversation.
But certain class of stupidities embarrass me more. Things like faulty logic, weak common sense and inability to learn things fast.
Here’s one such example. Las Vegas, 2007. 1 AM. Enough lights to signal passing alien crafts. I stood at a roulette table and made a bet that was monumentally stupid. The moment I realized the stupidity I was instantly embarrassed. My body flushed and I slinked away from the table never to show my face near that region of the casino.
If you’ve never played roulette or know the basics, it works like this. You place a bet on one or more of the spots on the roulette table. Once the betting is over, the dealer spins the wheel and depending on which spot won and the odds you get the equivalent returns.
There are many bet types here.
Of course I didn’t know much when I walked to the table drunk. But it became fairly obvious that it’s a simple game of odds. For instance if you place a bet on any of the numbers from 1 to 36, you will get a 35x return on your bet in case you won. On the other hand, red and black with equal probability will give you 2x returns.
To be fair, I was in Vegas for exactly 8 hours (from 12 midnight to 9 am the next day when I had the flight - it’s a different story that we missed the flight). In any case, by the time me and a friend drove into Vegas after attending a Metallica concert, we were already fairly buzzed and tired. I was running on fumes but the bright lights of Vegas meant that we wanted to put a night out. All this is to say that I have an excuse for being stupid.
So, in any case, buzzed and sleepy, I made a few random bets across the numbers and after not winning anything for a few rounds bet on lower return but higher odd combos like odd / even, dozen bets, etc. Then eventually I bet on red. When that didn’t pan out, I had a brain fade and I bet on both black and red, splitting my bet equally across them.
The moment the dealer started spinning the wheel, I saw my own idiocy and embarrassment sliced through my alcohol-soaked grey matter. Of course I ended up with the exact same amount of money that I started with.
I haven’t thought much about it - it doesn’t even rank in the top 50 embarrassing moments of stupidity I’ve had, but I thought about it recently as an analogy for other things in life.
It made me wonder if sometimes in attempting to hedge our bets, we actually play hands which neither give us wins nor give us the benefit of learning from losses but instead feels like work that maintains just status quo.
Betting’s been on mind a lot recently.
Poker
I’ve been bitten by the poker bug for a while and after spending an inordinate amount of time playing Zynga Poker, I decided I wanted to actually get good at it. So I decided to learn and watch some videos.
All the James Bond movies and myth around poker had ruined it for me because I was playing Poker the worst possible way. I quickly spotted a few of my patterns which was negative:
I was focusing too much on the bluff (myself and others) that I wasn’t actually paying enough attention to the math of the hand.
I was betting on a lot more hands than I needed to be
I was all over the place - meaning, the same hands would get different kinds of approaches from me purely on some random intuition thus not allowing me to develop any kind of patterns of learning.
As I was going through some videos and lessons, one specific instruction stuck with me: Raise or Fold. This is not absolute advice. For any poker strategy advice, you will probably see something that’s the exact opposite.
But it worked for me - someone who played a lot of hands ambivalently.
I will not go into the details of poker here but to keep it super simple, in any Texas Hold’em poker hand you could do one of the following: a) Call b) Raise or c) Fold. When you call you are essentially matching whatever is being bet on the table.
Raise is when you raise the bet on the table. For instance, if there is a bet of Rs 100 and then you bet Rs 200, you have raised the bet for everyone on the table and they have to either call, raise or fold of their own. Folding is basically closing shop for that game and not participating any more.
So now, back to raise or fold. When I started applying this rule of thumb to my hands, I realized that my tendency for most hands was to wait, watch and follow. I was often calling bets that others made without any clear purpose. I would play hands that were average to poor and then wait to ‘see what happens’. I would not bet big when I had awesome hands as I would still think about the scenario of someone having an even better hand. Then randomly, I would try to bet big on a decent hand and lose. It lacked coherence and conviction.
Raise or fold. The trick in poker is to fold for dozens of games and then bet big in one with a strong hand and position and make a killing. It’s the ability to have patience to lose perhaps many blinds or small amounts and to let go game after game while others may be winning. But eventually when you have a good hand, bet bigger.
It’s not easy. Seeing through this filter, every hand was a tougher decision fork. With the strength of my cards, would I now raise given what others have played and the state of the game? If my answer is not yes, then I should probably fold rather than just match what’s on the table. It wasn’t easy. Too often my brain would scream, “but this is neither, this is somewhere in between and it makes sense to call” and I realized how I was always ending up taking the follow the table approach rather than set direction for the table.
“The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. If people are yelling, ‘Swing, you bum,’ ignore them.”
Forgive me for the mandatory Warren Buffet quote but the lesson is fold, fold, fold. Until you can raise.
Hell yeah, or No
I’ve been an on and off listener of the Tim Ferris podcast for a few years. The on-off happens depending on the phase I am currently going through. Sometimes, I am in full on “inspire me to great things” mode. At other times, I just want to listen to someone talk utter nonsense in his podcast for 20 minutes and pick something funny, silly or just banter.
While specific conversions on Tim Ferris is a hit or miss for me, Derek Sivers falls into the category of a hit. A phrase that stuck with me from the podcast, “Hell yeah, or no.” I began to see it everywhere.
It boils down to a simple question: Is what I intend to do under the category of “hell yeah”? If not, then I probably shouldn’t do it.
I am pretty good at saying no. My inherent laziness means that I say no to things quite often. But I realized that I was not using the framework in a consistent manner. Sometimes I also said “yes” to things as they come. Well, the way it works is my brain needs a constant feed of new / interesting things and so when something new and shiny comes along I would say yes based on how much fun I imagine it would be. But then it inherently meant I would say no to many other things that I would need to do to double down on what I was already doing.
Like in poker, I was using random judgement to determine what to do and what not to do - often defined by what’s fun at that point rather than what’s the activity that’s more aligned to my “hell yeah” activity. It’s hard to determine this at first, but perhaps like poker, the starting point for most things should be to “fold” or say “no” to things. And then only let a very small sample of things pass that filter into a “raise” or “hell, yeah”
Easier said than done. To me, very few things fall in this category: writing, photography, travel. I would love doing these things for hours without pay. And that’s my definition of the hell yeah.
But this applies even to little things. For instance, books. I used to always want to finish books all the time a couple of years before but then I would be stuck with it for ages and not read something else in the meantime. I then realized that the books I didn’t enjoy were preventing me from reading so many books I would enjoy. So now I give up on books that I do not enjoy more readily than before and pick up books that I do enjoy.
As always, there’s a flip side to this as well - one of hedonistic framing.
Is the No just a way to avoid pain?
Hedonistic framing is when people try to maximize psychological pleasure and minimize regret. This means that we keep saying no to too many things because the pain of loss or risk prevents us from even trying.
The way this manifests in poker is if you are folding way too much, playing only low risk, low stakes rounds. This is fine as a strategy but more often than not, this leads to small continuous bleeding and maybe equal levels of small wins. The most optimistic scenario is ending up just a little higher than where you started and pessimistic one is ending up just a little lower than where you started.
A corollary is that you fold too quickly if something does not pan out easily or effectively, leading to not sticking it out. For instance, if you wanted to start your own company but you struggled for 2 years, a hedonistic frame of reference would push you to close shop and stop the pain and regret that you foresee will only increase. I do have this problem in general and need to work on it.
One good way to think about folding or a No is as an offensive strategy and not a pain minimization strategy. Holding pattern usually feels the most comfortable but it is neither a strategy for happiness nor a strategy for achievement. It keeps you comfortably numb until you realize that you have blocked into a corner with no way out or no possible good solutions.
So raise or fold. Say hell yeah, or no. Go on the offense with your decisions rather than be on the defense against decisions forced on you. That doesn’t mean you have to always say Yes. In fact, it could mean that you have to say no more actively and frequently but as long as you are raising or folding and not just calling whatever comes along your way, it’s better.
Of course, unless you have Bitcoins. In which case just HODL. And pray.
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