I've been reading a lot of material lately about how to get out of the recession.  I disagree with a lot of what's being written, and I think that the fundamental attitudes of a lot of people need to change.

The first article was here: Time for Super Taxes for the Super Rich?  curiouscapitalist.blogs.time.com/2010/08/10/time-for-super-taxes-for-the-super-rich/

This article was pretty ridiculous because the guy formulates opinions by guessing and uses as datapoints: "A random blog on the internet, " while completely dismissing a guy with actual data ( Arthur Laffer online.wsj.com/article/NA_WSJ_PUB:SB10001424052748703977004575393882112674598.html ).

Here are some quotes from his piece (notice they're almost all just his personal opinions):

"I think the idea of a super tax rate for the super rich makes a lot of sense."

"So not only does all that money concentrated with the rich not help us, it actually makes our economy prone to booms and busts, and less stable."

"So are the rich paying too much? Probably not."

"For that reason alone, raising taxes on the super rich is perhaps more important than we think."

This article was super good: www.businessweek.com/magazine/content/10_33/b4191056654282_page_4.htm

The first idea that I see perpetuated over and over again is this tax the really rich mentality.  Keep in mind that I'm not really rich.  I'd probably be considered middle or upper middle class.  There's a lot of debate about what constitutes the rich, and how tax burden should be spread out.  I'd like to dispel a few misconceptions or offer some alternative viewpoints:

1.  It's easy to think that someone who made 175k (top tax bracket) is rich because they make more than 95% of Americans.  Well, what happens if you're a small business owner, you had one big year, and then your company goes out of business and you're stuck working at McDonalds for the rest of your life?  What happens if you're a kicker in the NFL with no other skills and you kicked for one year?  The assumption is that people in higher brackets will continue earning that…so, you know, tax them since they're making so much.

2. It's easy to ask a group that's in the minority to do something when you're in the majority.  "I don't play online poker, so let's make it illegal since it's gambling."  Would it be fair for everyone aged 20-50 to enact a huge tax on everyone older than 50 with the reasoning being "well they have more money than everyone else."  Yeah, they have more money because they have been saving their entire life and it's their retirement savings.  It's easy for a large majority to oppress a small minority, especially when everyone is looking out for their own self interests.  It's very easy for someone who isn't rich to look towards someone else, see how well they have it, and then decide that it's "unfair".  In the US, that's a horrible attitude because, in most cases, you had every opportunity they did to attain the same thing.  The attitude should be "how do I elevate my position to their position?", not "it's so unfair that they make 100 times more than me!"  People scream that CEOs make too much.  Yes, it'd be unfair if CEOs were chosen at birth like royalty.  But, you had every chance they had to become a CEO too!

3.  Unlike what you've been led to believe, income disparity isn't necessarily bad.  You keep hearing about the increasing wealth gap between the very rich and the average American.  Here's a question:  you work at a company and you make 30k and the CEO makes 50k.  I run another company and offer you 50k but I make 500k.  When you look at it from the perspective that I got a pay raise, and I'm better off than I was at my old company (assuming same working conditions, etc), then it's not so bad is it?  Who cares if the rich are getting richer if everyone is better off as a result?  This leads me into my 4th point…

4.  People tend to think of the pie as "fixed" or zero sum - it's not.  They think of economics as a fixed pie, where if someone gains, someone else loses.  If an Indian gets an American job, that job is gone forever to an Indian and America gets poorer!  If the rich have a disproportionate amount of wealth, that means the poor are getting poorer!

5.  Since income disparity is bad, we should redistribute the wealth, through higher taxes on the rich - more government revenue does not mean higher standard of living for the poor.  People like to argue that trickle down economics don't work…if the rich have money, it won't trickle down to the poor.  So, why would "trickle down taxes" work?  In and of itself, higher tax rates to not necessarily raise the standard of living for the poor.  On the whole, it allocates a piece of the pie from a more productive private sector, and consumer market into the hands of a less efficient public sector.  Yes, there are more social programs that benefit people on the whole, but most people's standard of living does not increase as the government collects more revenue.

6.  Bubbles are bad and we should do everything we can to avoid them.  A bubble is just a market correction between the perception of the value of assets and the actual value of assets.  Think of it this way…let's say your house's materials and land is worth 100k.  Over the long run, it is expected to rise 3% per year and maybe be worth 150k in 10 years.  During the bubble, your house was worth 300k.  The market corrected and now it's worth 110k.  Are you worse off than you would have been?  No.  There's just emotional pain tied to the fact that you thought you had a house worth 300k and now it's worth 110k.  What if I said, in the long run, by embracing volatility and said asset bubbles, you'd be better off?  You can have 5% returns with no volatility or 10% gains but deal with a bubble every 10 years?  If you're smart, you'd take the increased volatility / variance.  Great things came out of the .com boom, increased wealth, companies like Google and Amazon.  The pie, and wealth was increased.  Who cares if it was overvalued at one point and a correction had to take place??

7.  Most people who believe that bubbles are bad are also proponents of wealth redistribution.  This is kind of contradictory since, who do bubbles affect most?  The most obvious is institutional investors like pension programs, government funds, etc.  The second is THE RICH.  They're the ones who buy assets, who own more property, etc.  If you're poor and don't own a house, who cares if the housing market crashed?  If you're rich and you own a ton of stocks and 5 homes, you lost a greater percentage of your wealth than a poor person did.  You never see this mentioned.

8.  We're in a recession because the Fed kept lowering interest rates, made money easy and cheap to borrow, and didn't regulate - this was a variable, but not the reason for the crash.  First of all, low interest rates don't cause recessions.  Recessions are the result of way too many variables, all working together to measure.  Blaming it on one thing is pretty ignorant.  The Fed lowered interest rates to maintain growth in a slowing economy.  At some point, when US comparative advantage decreases, US standard of living has to decrease.  Lower interest rates prolonged the correction and prosperity while delaying the inevitable correction (bubble).  Now, if you were to place blame on the cause of the economic crisis, you could point to 2 separate problems.  The first, and biggest problem, was the misalignment of incentives.  People were compensated on volume and pushing through as many mortgages as possible, not quality.  What's the second common theme in the subprime mess?  Assets weren't valued correctly.  If you really think about why junk bonds were rated as A and AAA bonds by the government ratings agencies, you come to a few conclusions:

1.  The people at Moody's weren't smart enough to understand the products they were rating.  If you're the best and brightest in your class, are you going to go to Moody's and rate bonds or are you going to go to Goldman Sachs and create these instruments and make millions?  Again, mismatched incentives…in order to hire smarter people, the government has to be able to incentivize them properly.
2.  Moody's made money and incentivized their employees to push through more volume, rather than correctly rate bonds.  Again, it was a fundamental misalignment of incentives.
3.  Since Moody's and other government agencies had always priced bonds, everyone worked under the assumption that AAA rated bonds were investment grade and safe.
4.  The assumption of everyone involved, including the investment banks and institutional investors was that government ratings agencies were rating the bonds CORRECTLY.  This was the fundamental problem…the assumptions everyone worked off of were WRONG!
5.  If you were to blame anyone, it would be the ratings agencies who didn't rate the assets correctly, and indirectly, misaligned incentives in the WHOLE SYSTEM.  But yeah, you know, low interest rates led us to where we're at now!

9.  High unemployment doesn't necessarily mean a weak economy.  The metric that should be used for measuring an economy's strength is total GDP and GDP growth.  What if workers or employees aren't actually doing anything useful?  For example, you have a business, it makes a million dollars a year with a headcount of 20.  You reduce headcount to 15 and you still make a million dollars a year.  Your company just became stronger.  Likewise, GE used to cut the bottom 10% of their work force and they were a model of efficiency and innovation for years.

10.  The belief that the government should solve your problems.  Bad economy?  Governments problem.  High unemployment?  Government problem.  High cost of college?  Government problem.  If you're unemployed, you shouldn't be blaming the government or the bubble, you should be updating your skillset.  When I see starting offers for nurses at 150k, I think to myself there's a supply and demand problem….the opportunities are there for people willing to seize them.  If you look ta polls, when asked what the biggest issue facing America is, it's "the economy".  Like the economy is the government's responsibility.  The government can only provide good incentives.  The economy, and your personal well being is related to your amount of production.  Just like the money you can make in poker is related to volume.  It's easy to blame tougher games for your failure to win instead of improving your game, learning new games, putting in more volume.

11.  Examining a small sample size and deciding that a policy was incorrect without examining all the variables involved.  Encouraging investment and saving by lowering taxes was incorrect, because look what happened, the bubble and a recession!

A lot has been happening lately.  I've spent the whole summer traveling, first to Cancun, then to Tennesseee for Bonnaroo, then Vegas twice (decided to play in the Main Event), and finally Europe (Scotland and Greece).  I may write longer trip reports about individual trips, but I have a lot to write about and I don't feel like I can do any of them justice.

I've done a fair amount of reading lately...which has spurred some interesting thoughts, etc.

Jeff Ma's The House Advantage -  This is the guy that the movie 21 was based around.  This book should have been named "+EV Decision Making for Non Gamblers"  I thought it was interesting and really did a good job explaining concepts such as making +EV decisions, not being results oriented, asking the right questions, bankroll management, etc.  A lot of you who have read this blog will find many of the examples he uses familiar (Nate Silver, Belichick decision, sports analytics, some of the Kelly criterion and sports betting stuff I've posted).  His background looks a little similar to mine: engineering background, gambled pretty successfully, got into sports analytics and started an internet company.  Anyways, I thought it did a great job of articulating and making concepts I've understood because of poker and sports betting more concrete...I knew the concepts and still learned something from it.  A definite read for friends, parents, etc who don't understand poker in general.

Viktor Frankl's Man's Search For Meaning - I was traveling with a friend and she was reading this and telling me about it and it sounded like something I'd be interested in so I read it.  The book is both eye opening, moving, and even life changing.  It's about a psychologist who survived a concentration camp, some of his stuggles, and then introduces his ideas on logotherapy (healing by introducing meaning into someone's life).  The basic premise of the book is when people are reduced to nothing, and have no future to look forward to, they lose the will to survive.  The difference between animals and humans at that point becomes internal freedom of choice (how we deal with situations), and having a higher meaning in life to give the day to day struggle a purpose (weather this be some unfulfilled duty, religion, etc).  I found this applicable because I read so many blogs of poker players where they have made a lot of money and feel kind of empty, don't really feel like they contribute to society, or in general lack purpose.  It also explains a concept where the jobless fall into depression (something I experienced right out of school and I really don't get depressed) and that a lot of that is due to 1. feeling useless 2. living for and looking toward the future, and 3. having no work or nothing to occupy time and no meaning, there's no sense of purpose.  The solution is to provide services for free, volunteer, create meaning in life that's disaggregated from work.

Clayton Christensen's The Innovator's Dilemma - I'd recommend anyone in technology or software to read this.  If you're a poker player, it's not all that relevant but still an interesting business / thought provoking read.  It's an older text that was pretty groundbreaking at the time.  A disruptive technology is a product or innovation that is usually a derivative of an existing product, that initially creates a new market due to performance not being adequate to meet the needs of an existing market.  Sustaining technology, by contrast, is incremental improvements in performance to existing products.  Successful companies don't recognize disruption of these new technologies as 1. they're listening to their customers and their customers don't have a demand for it, and 2. the new markets don't offer large enough margins. 

I was thinking more about this book's hypothesis and whether the iPhone was a disruptive technology.  It's obvious that the iPhone and ther smart phones have been a disruption to Nokia's business.  However, it doesn't fit Christensen's model where a new niche market is targetted, and eventually performance increases to satisfy the incumbent's market and the disruptive technology, due to cheaper price, takes over the market completely.  Where the iPhone fits the classic disruptive definition is when compared to PCs and laptops.  The device is now powerful to be a stand alone computational device.  I think that it is possible to be disruptive both by targetting both the high end of the market or the low end of the market.  Specifically, disruption is based on innovation itself, not based on a particular model of innovation.  Innovation creates new markets and it is these new markets that have the ability to disrupt older markets.

If you made it this far...those of you who know me know that I've been dissatisfied with poker as my main income.  It's stressful, not necessarily sustainable, and I'm not sure about its long term prospects.  To that end, I've been putting feelers out in the job market and have decided to accept a job.  It's back to the real world for me...poker will be a nice side stream of income...which I'm more comfortable with.

Lately, I've had the pleasure of experiencing things on opposite ends of the spectrum and due to the contrast between the two things, it makes the horrible things seem extra horrible.

For example, 3 weeks ago when I was in Vegas we stayed at the Venetian, which is a nice experience.  The rooms are nice, the internet works and is complimentary, the Grande Lux Cafe is super awesome.  This time when I was in Vegas, we stayed at the Rio.  I won't ever stay at the Rio again...it's just so crappy.

•  The internet didn't work the whole time we were there.  What kind of hotel, with some business travelers, has non working internet for 7 days?
• We booked a non-smoking room with 2 queen beds.  They decided they were out of such rooms and gave us the option of 2 queen beds in a smoking room, or 1 king bed in a non smoking room.  We opted for the 2 queen beds in the smoking room, hoping it wouldn't smell like smoke.  Well, it was horrible.  So we decide to call down and get it switched, and no one picks up at the front desk for 20 minutes.  We finally get down there, and they magically have a non smoking room with 2 queen beds.  FU RIO.
• There are literally working girls everywhere in this hotel.  At one point, my buddy and I were playing guess the over under on # of working girls we'd see on the way to our room.
• The food is absolutely terrible.  Literally, the poker kitchen had the best food at the Rio.  The first day we ate at the Mah Jong asian restaurant and my Mongolian Beef was normal stirfry with some random red peppers thrown in to make it spicy.  My buddy said he had the worst tofu he'd ever had in his life.  We promptly went over to their bar and grill restaurant where he paid 30 bucks for a salmon dish that was dry, overcooked, looked terrible, tasted horrible, and their idea of "peppercorn glaze" was gravy.  By contrast, the Miso Salmon dish at the Grande Lux tastes awesome, is perfectly cooked, and costs the SAME PRICE.
• Room service took an hour and a half.
• Our safe was locked in our room.  Imagine what has to happen for this scenario to occur.  The person who was in the room prior to us decided to take their goods out of the safe, then relock the thing, acting like they had something in it.  That took an hour and a half waiting for the guy to come up to our room and unlock it.
• The room was the same price as the Palazzo. 
• The line to check in the first day took forever.
• No DVD players and TVs that are 100 inches, have fishbowl screens, and make it seem like it's 1985.
• The Rio sucks....move the WSOP to Ceasers.

The other thing that sucks is Citibank.  I have had this card with Citibank with a decent sized credit line that I just leave in a drawer because canceling it would be bad for my FICO score (both because of the length of time i've had the card and because it'd increase my usage of my available credit).  Anyways, apparently, due to inactivity, they decided that they were going to leverage a 60 dollar annual fee on the account, not notify me they were going to do this, and start charging it in April.  So, since April, since I assumed the card had no balance, I've been paying interest on this 60.00 annual fee...and the account has become delinquent.  They finally waived the fee after some hassle, but if i don't spend 2500 on the card in the next 12 months, they charge me the fee again.  So, my choices are 1. spend 2500 on a card with horrible rewards to eliminate the annual fee, or 2. take a ding to my credit score.  To top it off, you used to be able to consolidate credit lines...so I could transfer my credit line and history to another card with Citi that has worthwhile rewards, and spend 2500, but apparently the US Government decided to protect us from ourselves and disallow CC companies to do that.  By contrast, American Express has superior rewards, superior customer service, superior benefits, a better login portal, better everything.

Things that suck:  The Rio Hotel, Citibank, The US Government

Thins that don't: American Express, The Venetian, the Wynn

Oh, and I guess I was completely wrong about the LeBron situation.  I should have paid more attention to the part where he liked playing with his friends rather than the part where he was loyal.  Apparently it's not loyalty to organizations, it's loyalty to his buddies and to the comraderie playing with a good team.

I know everyone hates the decision, but I love it.  Mostly because I hate the Lakers, more than any team in any sport.  I loathe Kobe, I loathe their fans, the celebs in the audience, the fact that they stole Pau Gasol for nothing.  Can't stand anything about hte Lakers.  DWade has also been my favorite player in the league.  So, if that team can combine forces to take out the Lakers, I'm all for it.  Anything to beat the Lakers.  That and they're going to be super fun to watch.

Final thoughts:  people in Cleveland thought LeBron understood their pain being one of them.  I have news for you people, LeBron was never one of you.  He always thought he was better than his peers, he was a frontrunner, associating with teams like the Cowboys, the Yankees, the Bulls, Nike, etc.  How can you expect him to understand the pain of Cleveland teams if he was never a fan of Cleveland teams???

I may be the only person who thinks this...but I really think LeBron is staying in Cleveland.  If you've seen the documentary "More Than A Game" you'll see how much camraderie, friendship, and team mean to him.  He wants to be loved, he wants to be close to his boys on the team, and he wants to be loyal.

For example, in the movie, the starting PG on his youth league team, the team he had played with since he was 10, was too short to play at the local high school, so he decided to transfer to St Mary's Academy (a primarily white high school in Akron).  James and the whole team followed him there so that they could keep the team together and finish what they had started.  Keep in mind it wasn't just switching high schools...it became a community issue that these kids who were supposed to go to the local black high school and become local heroes, had basically spurned the community and gone to an all white high school.

What does this tell me?  It tells me that James is fiercely loyal.  If you saw him and the interaction with his teammates last year, he loved them and they loved him and would play harder to try to impress him.  The team was the best team in the Eastern Conference for most of the year...I just don't see him leaving.

In other news, I'll be playing in the Main Event this year...wish me luck!

I'm going to be the first one to say it, so don't be surprised when this gets brought up in the media.

Everyone is asking if Face Chat is going to work or not.  Personally, I don't think too many people are going to want to make face to face calls.  What you're going to see is a whole generation of kids growing up having video sex under the covers.  Remember the whole debat over sexting?  Forget sexting...a whole generation of kids is going to use their next gen iPod touches, iPads, and iPhone's to have video sex.

Also, another random thought: you know you're making good bets when there are tons of hedge opportunities available.

PHX at +320 is ridiculous...they only have to win that 23.8% of the time to be profitable.  It's like free theoretical money.

LA should be a slight favorite, but not that much of a favorite.

This is goign to be part 1 of a multipart series I'm going to get into on my thoughts on Bankroll management in life, poker and sports betting.  The first post will probably be some background information, the second will be my personal strategy and expected growth, and the third will probably be implications.  Hopefully most of you will find something useful in these posts.

I recently took a look at the following HSNL thread: http://forumserver.twoplustwo.com/19/high-stakes-pl-nl/what-do-you-do-your-money-778439/index6.html

The premise was what do people do with their money earned in poker, specifically investments.  A couple things about the thread are cool to me.  The first is that the once famous Jason Strasser (strassa2) makes an appearance in the thread and offers up his experience after essentially quitting poker and taking a job on Wall St.  The second is how many different ways people invest their money and to see the opinions of Taylor Caby and Cole South on what they're doing with their money.  I thought this advice was really good:

Risk tolerance and age depends on risk of ruin and someone's ability to replenish their capital. The general advice for younger people is to be more tolerant of risk since they have their prime earning years in front of them and have time on their side to stomach some volatility.

For most successful HSNL players it is unlikely that their prime earning years are in front of them. I seriously doubt that most will earn the sort of money in the future that they currently make or have made in the past playing poker. A few will, but most won't. IMO preservation of capital for someone in our position has a higher precedent than common advice/standard advice would dictate.

I have about 65% of my net worth in various investments, which is probably a bit too much but I am fairly comfortable with it.

A few things came up in the thread that I'd like to touch on:

1.  One guy aregues that the market will consistently go up 7% over the longrun, and as poker players, others argue this: "your sample size is tiny (which I agree with). with S&P@ 650 that 7% basically dissapears. we touched 666 last year. not advocating one view or the other, just presenting the argument."  He's basically saying that the sample size of the US stock market (150 years or so) is pretty small, and just because it went up 7% in that time period, doesn't mean it will continue to do so.  I think this is a great point, and I thought about it more, and I think I disagree.  The stock market can be thought about the total output of an economy or total value created throughout history.  If you look at the history of man, output, value, and raw goods and services have increased by a percentage throughout history, dating back to even Roman times.  The premise of the stock market going up depends on man's ability to innovate and to increase production...or GDP growth.

2. The second point which I thought was interesting is that everyone seems to advocate diversifying your portfolio because that's traditionally been the best advice (either via buying a variety of stocks, or a mixed strategy of real estate, stocks and bonds).  I'm not too experienced with this, so feel free to correct me if I'm wrong.  It seems really stupid to me to diversify...a +EV bet in the market is a +EV bet.  I think that your investment money should be treated as a BR just like you treat your poker BR.  You should be investing amounts of your BR that are proportionate to your chances of success.  If you're investing small enough portions of your BR based on probability of success, then you shouldn't worry about diversifying...ever - you're managing your BR correctly.  Just like if you're a winning poker player and you're playing with 500 buyins, barring some change in fundamentals, you probably won't go broke unless you take shots in really big games that you're underrolled...or in the stock market, bet the farm on a few stocks (I'll get more into this in the next post).  The lone argument is if you're going to retire soon, and you don't have the time table to handle a catastrophic event that wipes out your retirement money...but I'd argue that your unit size in the stock market is too big if that catastrophic event would wipe you out.  

I had this conversation with my father the other day on the topic of investment and risk.  He said that when he made a certain amount in the market, he'd take out 75% and put it in a savings account, and then use the other 25% to continue to invest.  This seemed really wrong to me and I tried to teach him about bankroll management Kelly Criterion.  My argument was that he should treat all the money in the market as his "investment br" and manage it like a BR, especially since he doesn't need his money right now.  If he's worried about losing his principal, he can mitigate risk by using Kelly units proportionate to risk and probability of success on stocks that he wishes to purchase.  If he wishes to further mitigate risk, he can just reduce his Kelly unit sizes.  Therefore, to be conservative with your money and not lose it, he should just risk less of his total amount, rather than pull most of it out and put it in a safe place, and then risk 100% of his remaining capital on stocks at arbitrary unit sizes.

The reason why people advocate diversification is because most people don't know how to manage a bankroll!  What's the enemy to bankroll growth?  Committing too much of our BR in poker (taking shots underrolled), and overbetting in the stock market / sports betting.  Why does conventional advice advocate diversification?  Most people have no idea how much to risk on a specific event / stock and so they OVERBET.  Diversification protects the casual investor from making catastrophic BR mistakes, although not theoretically optimal.

Interestingly enough, Jason Strasser, the guy who I think is probably best qualified to comment in the thread, says to find a hedge fund and invest most of your money with them, or a more focused strategy.

Took 8th in the Sunday Mulligan this past week.  Was playing out of my mind and was chip lead with 32 or so to go.  Made some really big laydowns and also ran hot (JJ > QQ and AA).

Going to try to play tournies on Sundays as often as possible.

I love the 2p2 "The Well" posts and always found them to be one of the more interesting things to read on the site.  You're basically getting a question and answer session with some really successful and interesting people and get to ask them anything.  Anyways, I recently stumbled upon the ultimate time sink...it's the Reddit IAmA section or "I am a", people can start their own threads, and then everyone else on Reddit asks them questions.  It's a series of "The Wells" about things other than poker and sports betting.

I won't ruin all the surprises, and there's probably something of interest to most people and you'll probably spend hours reading random threads.  If you're bored, wander over there and prepare to be sucked in for a day.  Here is one that I found super interesting:  www.reddit.com/r/IAmA/comments/bs8bs/iama_professional_concealment_designer_i_make/

The guy basically started off building hidden compartments, hiding things in books, became really good at it, and now makes a really ridiculous living creating concealment devices, rooms, objects for hiding valuables.  Here is a quick example:

How much would you charge to make, say, a 3'x3'x3' hidden safe anywhere in a bedroom?

It's not the size, it's how hard you want it to be to find it. Do you want it concealed from casual inspection? A junkie thief? A professional thief? A forensic team?I started doing this type of work years ago with the simpler, less expensive projects (a few thousand dollars), but with limited bandwidth, it now only makes sense for me to do the big budget projects. These involve a discovery process that costs more than the old projects cost in their entirety. A lot depends on the building itself, what we're concealing, and from whom. The first thing I'd usually do is install a fairly well concealed decoy safe with something valuable inside.

Anyway, to answer your question, a project could run anywhere from $20K - $250K. At the higher end of this budget, professional searchers would not be able to find the concealment without doing physical damage, and even then, it would take them days.

Moral of the story is do what you want to do and become really good at it.  If you're really good at something you're going to love your job and get paid really well.

We were watching the NFL draft a week or so ago, and the Denver Broncos drafted Tim Tebow in the first round.  All my friends were immediately sad, dissapointed, or livid or a combination of the three, while I was ecstatic.  I'll be the first to admit that I wasn't the biggest Tebow fan in college as I thought the things he did wouldn't translate well, but I've changed.  Here is why I think the pick was genius:

1. Tim Tebow is left handed.  Think about the implications of this for a second.  First of all, you devalue the 2nd most valuable position in the NFL, left tackle.  Teams expend high 1st round draft picks to secure great left tackles, you've just decided that you don't need one.  You don't have to waste that draft pick, you don't have to over pay for a left tackle, and if you have a great left tackle, you can trade him for more value than you initially paid.  The second major advantage is how you run your offense.  If you practice week in and week out with your progressions in the opposite direction and your routes mirrored, that's a huge advantage.  NFL defenses emphasize the pass rushing right end, they defend the side of the field in which the right handed QB looks first.  Imagine, 15 weeks out of the year, prepares one way, then the one week out of the year they play you, everything is switched.  That's a huge advantage.
2. Game theory.  Think about the play distribution of a normal NFL team with the goal being balanced 50% runs 50% passes.  For obvious reasons, teams pass more often on 3rd down due to down and distance considerations.  On first down, they're more likely to run, to keep their play distribution at 50/50.  Here is a breakdown of a typical team's playcalling by down:
   • 1st down: 65% runs, 35% passes
   • 2nd down: 60% passes, 40% runs
   • 3rd down 75% passes, 25% runs
3. Think about how unbalanced teams are in those situations.  The proper way to balance your playcalling is to go 50/50 on first down, 60/40 on 2nd down, and probably 60/40 on 3rd down.  In order to get a 50/50 run pass balance most teams are unbalanced on first down.  What Josh McD and the Patriots figured out was that if you balance first down, your offense becomes more unpredictable, and your overall play distribution is more slanted towards the pass since you have to pass on 3rd and long.  A balanced NFL offense should be 60% passes and 40% runs! 
4. How does this relate to Tim Tebow? If you have a QB that is a threat to run, your offense becomes way more hard to stop.  If a defense is trying to cover receivers and your QB can run for 3 or 4 yards on 3rd down, that's huge.
5. Which brings me to my next point that it's really obvious what the Broncos are doing.  They're acquiring a bunch of flexible, smart, high character football players that can do a lot of things.  A RB isn't good if he has to come out in obvious passing downs, a QB should be able to play in the shotgun, out of a traditional pro set, run the wildcat, etc.  Every player we've drafted is smart, flexible, and does many things well, although none great.
6. The biggest knock on Tebow is where he holds the ball when he drops back, and his throwing motion, which he's already made huge corrections to in the past 3 months. 
7. The guy has ridiculous work ethic, anyone who has ever coached the guy has nothing but praise for him, John Gruden loved the guy in all the draft coverage.
8. He played in the spread in college, these guys broke down the spread and how McDaniels used it successfully with Cassel: www.milehighreport.com/2010/4/28/1442927/why-draft-tebow-lips-like-sugar-or
9. Watching tape of him in college, he immediately does things Kyle Orton can't.  I wouldn't be surprised to see him starting at the beginning of the season, because, hey, it doesn't take much to be better than Kyle Orton.  We weren't ever going to win anything with a QB that can't make a play.
10. All Super Bowl winning teams have something in common, a QB who makes a play when there's not a play to be made or when no one is open either with strong throws, or by extending the play with his feet.  Kyle Orton doesn't do this.
11. He gives you another option on 3rd and 1 and 4th and 1.  The Patriots were the most successful team on 3rd and short and 4th and short in recent years.  Their favorite play was a Tom Brady QB sneak.  We had a huge problem picking up 3rd and 1 and 4th and 1 last year and the threat of a QB who can power it up the middle and also pass is huge.
12.  I think he's better than both Orton and Quinn.

It's NBA playoff and NFL draft time at that means the stat geek in me comes out.  I deliberately waited until after the playoffs have started to post these, some of you might think it's past posting, but I didn't want you guys to go out and bet these games before I could :) 

Here are each team's odds of winning the Eastern Conference:

Western Conference:

Without going too much into our methods, we took our system and simulated every home and away playoff game and came up with odds for each series.

I'll say that Orlando at 3-1 to win the Eastern Conference is a great bet..

I've been reading the poker is a shitty life thread in NVG on 2p2.  There's an interesting argument where some people argue that poker provides no value to society and is a negative sum game and some people argue that it does provide value.  The no value argument is pretty self explanatory while the other side bares some explaining. 

Here is the value argument to poker:

You're close to the right answer... but unfortunately you're misunderstanding the nature of poker. Poker is entertainment.

As such it adds the same type of value to society as other forms of entertainment do.

Some people come home after a hard day's work, plant their asses on the couch, and watch TV or a movie to relax and wind down. Others come home, and play poker to decompress.

It's pretty difficult to claim that the entertainment business adds nothing to society; video games, movies, television, gaming, plays, whatever all serve the very useful purpose of escapism.

I'm not going to argue the relative merits of watching a movie vs. playing poker online for a few hours at the end of the day; I think that's up to the individual. But for people who like a challenge, and enjoy thinking, active entertainment will get more out of a game like poker, and comparatively less out of a passive entertainment vehicle like television.

Like any other form of entertainment, poker has its "stars", but it also employs a ridiculous number of people that serve in various capacities delivering that entertainment vehicle.

To argue that poker adds nothing to society is to argue that entertainment adds nothing to society, which is a very, very difficult sell.

I disagree with this argument and this is why:  This argument isn't quite accurate and everyone making this argument doesn't understand the concept of value creation as it relates to net benefit to society and also wealth, a byproduct of providing value. Fundamentally, poker players themselves create 0 value when playing poker (there are some exceptions, i.e. on this site, Phil Galfond, Niman, Giggy, etc create value by offering up a service...a training site that wouldn't otherwise exist and, by combining their talents and labor in a unique way, have created something that you would want to buy, that you wouldn't previously have bought, hence, they're creating value for you, and wealth for themselves).

You can think of an economy of all the goods and services that people can exchange money for at any point. In general, society thrives when value is created. For an extreme example, think of the Apple iPhone - labor, R&D, and raw goods were combined to create a new device which created a new market. With it, value that didn't previously exist has now been created. Since the money supply isn't fixed, you would assume that the money supply increases to account for this new value creation...or WEALTH is created for our country.

Some new goods and services cannibalize old goods and services (think back to when Encyclopedias were popular as a kid, then Encarta on CD replaced them, now the internet has replaced Encarta - no value was created and wealth was just reallocated).  You, the poker player, aren't adding value to society, you're just a vehicle for wealth reallocation.

So, what is the subtlety? The poker sites: Full Tilt, Stars, etc have created  the value, and as a result, have reaped the wealth. They created a new market when there wasn't previously a market. The players on the site don't create any value or wealth...it's just an exchange of money with some people coming out on top and some on bottom. Some might argue that this is what Wall Street does, but they provide some value. For example, let's say I need to go public, I go to a big investment bank with the experience, attorneys, and financial know how to do it. Also, you can think of there being a market for mortgage based securities so they did add value in that sense and we're all better off than if mortgage securities had never been invented.  An actor provides value, because they're an input into a finished product(a new movie) which combines labor, talent, and investment in a way that it provides something new to society, and thus, creates wealth that wasn't previously there.  The money supply will grow to accomodate people who want to buy new Avatar DVDs, or to create 3d technology, or to go to the theaters to see this new movie.

To put this a different way, think about this. The city builds a tennis court in a local park. This provides value, raw goods, services and labor were combined to create something not previously there. You play tennis on this court...you're not actually creating value or wealth playing on the court. You're just playing tennis. That's exactly what you're doing as a poker player.  In most cases, the market dictates that the wealth flows to those who create the most value, hence, Howard Lederer, Jesus, and Phil Ivey are rich.

There are fringe benefits, however. Some people do great things and start interesting businesses and employ people with money made via poker. Some people add value to society via celebrity gained via poker...but in most instances, that's not most of you

That's all...I'm starting to despise this game.  I made up a new song...sing along with me...all the entries on my poker tracker are red!  All the entries in my hold em manager are red!  I'm losing money hand over fist!  My graph looks like a skislope!

Edit:

I should add something random so this isn't all negative.  I was watching the real world tonight and I decided it's such a sham whenever one of these people interviews for a job.  There's absolutely 0 chance of someone on a reality show not getting the job they apply for because most of the jobs they're applying for can get free publicity from MTV whenever this person is on a reality show.

For exampe, this season one guy has interviewed for a position with the Capitals (of course they're gonna want someone on MTV because it's free promotion!), or a photographer for gay and lesbian events (again, it's more free publicity), and another guy who works for a human rights organization (again, they want publicity).  If you look at the Hills, Lauren applies for job, Lauren gets job because all those fashion companies want the MTV publicity.

Just an observation.

I'm at a huge crossroads in my life.  I'm pretty close to making the decision to go back to working a 9-5, backburnering the startup and putting it into a self sustaining state, and using poker as a side stream of income again.  There are numerous reasons for this which fall into 2 categories: 1) some changes in the market conditions, made some conceptual and strategic mistakes, 2) poker is going horribly and I'm not happy with the stress of having to make money while playing poker.  I'll start with the poker stuff since some of you aren't really interested in anything else and think my blog entries are obnoxiously long :)  If you're not interested in this stuff, I list my thoughts on the new healthcare bill at the end of this blog post, which I think everyone who's playing professionally should consider the tax implications.

So, I hate poker.  I'm not sure if I'm grossly overplaying my hands or I'm just running into monsters over and over again.  I'm not even sure if I'm a winner in the games I play in anymore.  At one point, I was a > 3bb winner at 2-4 over a 120k hand sample size (Nov - Jan).  I've been losing steadily since and I'm only a .6BB winner now (Feb - March).  As I mentioned in a prior blog, a lot of it might be more regs per table since there's been a huge downswing since the elimination of shorties.  For the most part, I've always played badly and spewy against regs.  Although, for the most part, I could induce as many mistakes as I was making.  Look at the big winner's winrates...they're all flatlining and I'm pretty sure it's cause they're playing with a couple more regs instead of shorties on average...which spreads the fishes money out thinner, they get 3bet more, increasing variance, and regs aren't getting it in as lightly.  I'm tilting almost every session, losing more buyins than I should, and I find myself paying off because I'm pissed that my flopped set is the 2nd best hand by the river again.  It's stressful to withdraw for living expenses (my expenses are high), lose, and also have to pay taxe .  I always thought if I needed to make more, I could just play more...but the more I play the worse I play.  I play best when I get 2k hands in a day, then go do something else (which is what I did from August to January).

There have also been changes in the startup environment.  Facebook, Twitter and FourSquare have entered the space and it's hard to compete with these well funded options.  StickyBits, a well funded company, released doing the same thing I'm doing, but with more money.  They also bombed at South By Southwest with the same problems I've seen in the past year.  While, there are lots of interesting options and directions to take the company, they would require another 8 months of my time to get up and working and I'm not sure I'm willing to play poker as my only source of income for the next 8 months - year.   So, what have I learned?  Connections and press matter just as much as technology and idea.  There have been worse ideas, or different ideas who have been more successful because the people who founded the companies were connected and could generate the right amount of press.  The second big lesson I've learned is you can't just build a site and expect viral growth.  Just because you build the tools for viral growth, doesn't mean your site will grow virally.  The third, and most important, is a problem that I think tons of internet startups struggle with and that's content creation / participation.  When you create a new website, you don't really have any content.  For example, when Twitter started, people couldn't gain value without participating.  Well, it turns out, 1% of web users are content creators (you can think of these guys as bloggers, website creators, Yelp reviewers, etc).  You need these guys to create the content on your website, so that the rest of the 99% of the population has something to interact with.  It's super important to get a base of these users creating content on your platform.  In addition to that, it's almost more important to SEED CONTENT.  That's right...create value on your site / platform for the general web population and then let them share it to their spheres of influence and social circles if they find it interesting.  So what would I do differently if I had to do it again?  I'd spend more time seeding content and less time worrying about other things.  I'd also create incentives for participation.

When I quit my job a year and a few months ago to do this, I was going to use poker as a means to do what I wanted.  I'd either gain traction with my startup and go raise money, or I'd go get a job again.  I didn't ever want to be a professional poker player because it limits options for future career growth, and it may not be sustainable.  If I wanted to be a professional poker player, I'd rather work, and still play the same amount of poker.  Working a 9-5 with a steady income, and then using poker to live the baller lifestyle is kind of sounding good again. 

So, what now?  Well, I have several options.  I can continue pouring time and effort into my startup and use poker to fund things, start next year with a nice sports roll that I've built up this year (knowing that I'd pretty much be living paycheck to paycheck - I still lead a nice lifestyle, it's just not what I'd like), I could get a job and play poker on the side and keep working on some changes on my startup.  This would allow me to save 100k or so to either hire someone to work with me or to start next year with a 100k sports roll.  Or, I could do some contract work, increase my cash position while continuing down the startup path and seeing how that looks at the end of the year an reevaluate.  With how poker is doing, I don't want to deal with using that as my income source any longer, but if I go on a huge upswing, who knows?

I should be playing poker, but I don't really feel like playing / losing so I decided to look up a little bit about the new healthcare bill that's about to pass.  Four things immediately jumped out at me:

1. Individual are required to purchase coverage or face a fine of 695 or 2.5% of your income, whichever is greater.  This is ridiculous.  Let's say you're a young, healthy individual, and you think your hard earned money would be better allocated towards something else.  You've done the math, and you've decided that you don't need to purchase coverage...in fact it's more beneficial to just set some money aside each month for when something happens since the chances of something happening are low.  You'd rather have that new HDTV, or take an extra vacation per year.  Who is the government to say you need to buy insurance?  Some of you may be saying, but you're required to purchase auto insurance and that's not an issue.  The subtle difference between auto insurance and health insurance? It's a concept economists like to call an externality.  What is an externality?  It's when you perform an action, and someone else realizes the negative consequences.  For example, when you injure someone in a car accident, you have to consider their medical bills, other long term health damages you may have caused, and loss of quality of life.  When you don't buy insurance, who is affected?  Only yourself. 

2. The creation of Health Insurance exchanges that would allow small businesses, self employed, and the unemployed to purchase less expensive coverage.  This is super exciting to me because when someone says an exchange will be provided selling coverage, the thing that pops up in my mind is ARBITRAGE OPPORTUNITIES!  Arbitrage depends on the item in question being a perfect substitute, and the opportunity to resell the item in question.  If something is being offered on an exchange, presumably you should be able to buy it at a point where the pricepoint is low, and sell it later at a higher price when prices are high.  Although health insurance is weird because, in most cases, policies can only be sold to individuals and can't be resold, so I'm not exactly sure how this would work.  But, I'm sure you could create a portal where people buy coverage, you take a commission, and just buy it at the best price on the exchange.  Or, you could pool different groups of people to create the largest buyer pools on exchanges, and then take a commission of each policy sold.

3. Companies of 50 plus will be fined for not providing health care.  That's a genius plan, in an economy struggling to create jobs, and to retain jobs, you're no encouraging small businesses not to hire and to hire contractors!  I know one big company who hires contractors, fires them after 9 months (so that they meet the contractor requirements) and rehires them at the beginning of their fiscal year.  What are the unintended consequences of legislation like this?  Well, it's going to add more paperwork and bureacracy for small companies looking to hire...which means they won't hire.  Imagine tons of companies with 49 employees and tons of contractors.  It adds more paperwork, more rules and laws to comply with, for businesses struggling to survive.  Those of us who have run companies know that they're fragile in their early stages, you have to grow at the correct rate and not over hire.  Mark Cuban says that a great way to stimulate the economy would be to eliminate all taxes / paperwork for companies under 10 people.  That way, they could focus on running their companies, growing their business, and then hiring when they need people rather than hiring CPAs and Attorneys to deal with legal and accounting paperwork.  Trust me, I've tried hiring people and, in most cases, going from the original founders to hiring employees is a royal pain.  You owe federal taxes several times a year, you have to pay FICA, you have to calculate everything, send W2's.  It's much easier to hire contractors.

4. Tax implications - Specifically, they're going to impose a tax of 40% on "Cadillac" health plans, companies larger than 50 people would be required to pay a fee of 2k per employee if they don't provide coverage, investment income on individuals making 200k or more or couples making 250k or more would be taxed (I'm assuming they're raising capital gains taxes for people who make more than 200k).  Most of these tax hikes kick in in 2014 or 2016 or 2018 so for you high stakes players, if your income is going to be higher in the next few years, you should withdraw as much as you can and take the tax hit now!  Additionally, Russell Fox (Poker CPA) wrote an informative blog post on the implications of the new legislation here.  I can't explain it better than he does, so I'll quote his example:

"When I last looked at the bill, the tax was 2.9%. In the “final” version of the bill, it’s up to 3.8%. Let’s take a hypothetical gambler, Joe Student. Mr. Student has $500,000 of winning sessions and $495,000 of losing sessions. After his standard deduction and exemption he owes no tax.

But not in the near future. He’ll owe 3.8% on $300,000 of mostly phantom income, or $11,400. What will Joe Student do? He’ll cheat on his taxes, of course. Pay $6,400 more than what he made on his income—you must be kidding! But that’s exactly what the legislation dictates."

HBO's new show How To Make it In America is kind of awesome.  It does a great job of capturing several things: 1. the breaks and luck that go into making any business or venture successful, 2. how a lot of times, breaks are the result of desire and a barbrawl, naieve try anything mentality and 3. the comraderie between buddies and people starting companies.  Reminds me of a short book I read awhile ago called "Lucky or Smart" written by one of the founders of the company Tripod (they used to host and provide tools so that you could quickly build a website).  Essentially, the conclusion is you have to be smart to recognize and take advantage of opportunity.  Or, to quote someone else, luck is what happens when preparation meets opportunity.

I know I promised a Dorkapalooza write up, but I'm kind of swamped.  For those of you with NCAA brackets, here are a few hints and resources to look at.  The best college basketball resource out there is KenPom who basically creates his own ratings based on teams offensive efficiency (points per 100 possessions), defensive efficiency (points given up per 100 possessions), adjusted pace statistics, and adjusted strength of schedule statistics.  The reason why this is important is a team that scores more points isn't necessarily a better offensive team.  They could just be playing faster than other teams, and when the other team slows the pace down, they score less points.  The best way to compare teams is offensive and defensive efficiency rather than points scored and given up. 

This ESPN Giant Killers article also does a great job of describing how to pick upsets.  Specifically, look for teams who:

"employ high-risk/high-reward strategies. Some try to generate extra possessions by pressing, going for steals, aiming for blocks or crashing the offensive boards. Others attempt to maximize the value of possessions by taking bunches of 3-point shots. Again, if you try these strategies and fail, you can easily find yourself down 20 points within a matter of minutes. But successful Killers execute. Statistically, they have:

• Low turnover rates and high rates of generating opponent turnovers.
• High offensive-rebound percentages.
• High 3-point scoring as a proportion of all points scored."

Good luck in your brackets!