Monday, January 09, 2006

On the Value of Taking Shots

And of course the correct answer to the pseudo-question at the end of my last point is no, don't sit at 50/100, and don't make any more -EV sports wagers. Take the money and stash it away, and keep grinding away in my comfort zone. Then grind away some more. And some more.

I think taking shots is a good idea. Necessary, even. But I think it also gets misidentified sometimes, though, or is trotted out as an excuse for impatience or general malaise.

On the surface, taking a shot is pretty simple. You intentionally play at higher stakes than you normally do, with a sum of money that is statistically not sufficient to absorb the natural swings of variance. Depending on your risk tolerance, you might have a 50% risk of ruin. Which simply means you'll go broke half the time. Your risk of ruin could be 10%, it could be 75%. You know this going in, and accept it, and are prepared to soldier on if the money you risk simply disappears into the ether.

Why would you take a shot, then, if it involves that element of risk? Why not continue to grind away? Well, now we're getting somewhere.

The easiest and most correct answer is simple. If you're a winning 2/4 player, and have played a kajillion hands at that level, you have what it takes to be a winning 20/40 player. Really. If you're a winning player at higher limits, you win more money. What you likely lack, though, is the bankroll and the experience to consistently win at 20/40.

We can mystify poker and construct a cosmos where we toil and slowly work our way up, level by level, learning what we need at each stop to continue the climb upwards, but that doesn't really hold water, to a large extent. Yes, over time you'll encounter a huge range of experiences that will cumulatively result in you playing better and better poker, but it's not quite as graduated as we make it out to be sometimes.

Or, more simply, people suck just as much, on average, at 20/40 as they do at 2/4.

So if taking a shot can speed your ascent to the next level, take a shot every now and then. Especially if you're close to being adequately bankrolled but not quite there yet. Understand the risk and set a simple goal of generating enough funds so you can comfortable play at the next highest level. Even if you bust out you'll have valuable experience at the next level, for when you do get there.

But you have to also be ready to reap what you sow, even if you're successful. Especially if you're successful. Which is the flip side of taking a shot that isn't often discussed.

Let's say I took my degenerate sportsbook winnings and sat at 50/100 with a piddling $2,500, my heart in my throat. I'm willing to lose it all but want to take a shot at bigger limits. I get down to my last $200 then go on a tear and finish the session at $15,000. Woo hoo. I am the genius of teh poker.

Okay, but then what? I'm still not adequately bankrolled for 50/100. I do have $15,000 more than I started the day with, which is nice, but I have exactly one session of experience at 50/100, and the idea of playing at those stakes still makes me throw up in my mouth a little. I can either continue to take shots at 50/100 or retreat to limits I'm comfortably at, just with more money in my pocket.

Even if I was adequately bankrolled for 50/100, I wouldn't be ready psychologically, as it's too large a leap in limits for me to be comfortable playing at. I wouldn't be able to play my best game, stressing out over the sums of money involved.

In that example, the utility function of my taking a shot is really poor. I don't get much bang for my buck. I take on a lot of risk, sitting with just 25 BBs to gamble with, but I don't get much upside, even when successful.

You might ask the very valid question, then, as to what the hell then was I doing betting $400 yesterday on a +600 dog in a college basketball game?

In that instance, I saw a reasonable amount of utility in taking that shot, in light of the larger picture of my plans to quit the day job soon, and my desire to build up some financial padding for that move. $400 in and of itself wouldn't make a huge difference in that respect, but $2,400 would, from both a financial and psychological standpoint. If it hits, boom, sock it into savings. If it misses, I'm out $400. That's the goal, not to continue to make silly bets to run it up to $10,000, not to then sit at 50/100. Get good value for a shot, take it, and be ready to move on, successful or not.

(And yeah, I'm slightly justifying my slightly embarassing luckbox bet in retrospect, but hell, this is my blog, damnit, and I can do whatever I want.)

I do think there's a nuggest of wisdom, though, in all of this babbling. In the long run, taking occasional shots is +EV. Just have a goal in mind, and don't just consider your ability to move on if the shot is unsuccessful, but also have a plan for what's next if the shot is successful. Make sure you're getting good value for the shot and not just putting money at risk unnecessarily.

1 comment:

cc said...

I agree with you regarding have a goal in mind but would add and prepare/have a game plan, including what to expect. If you remember, I've taken a shot accidentally when I was melting down, which isn't exactly taking a shot--just getting shot! I think taking a shot can be very nice if you prepare with a positive and negative game plan. Good stuff, scurvy.