Fiction (mostly)

Up to now, Clara and Matt enjoyed a perfect life together. It’s not that I’m jealous. I took my shot at Clara back in college the summer Matt stayed in Paris after a semester abroad. Clara was always out of my league. In high school, Matt started on the varsity basketball team starting his sophomore year. He couldn’t dunk, but his smooth jump shot and solid defense earned him the position. He also ran the mile for the track team. He was awarded an athletic scholarship and attended Princeton. He could have attended any Ivy League school on his academic abilities alone.

Clara and I attended state university where our friendship developed despite my failed romantic overtures. We’ve stayed close. Matt and I even pal around. After I retired, Matt invited me on his bi-weekly poker adventures to Indian casinos (within a hundred mile range) and his annual poker pilgrimage to Las Vegas for the World Series of Poker tournament. My wife, Sarah, hosts them over for dinner every month or so, and she and Clara oft shop for clothing to replace perfectly fine outfits they recently donated.

So, I was surprised when Clara joined me at Champion’s Coffee last week; it’s where I spend my mornings writing fictionalized reminiscences. Matt’s physical prowess served him well earlier in life, but he pressed it too far and too long. He’s endured several knee injuries and had spinal surgery last year to regain motor control of his right leg. Matt canceled our poker trip last week for a follow up doctor’s appointment. According to Clara, the doctor said his condition is permanent; the surgery did not work. Clara thinks Matt is falling into depression, though he may simply need time to adjust his life to accommodate his disability.

Clara is at a loss of what to do, the reason for her intrusion into my writing time. She’s considering leaving Matt, but she’s graceful enough to not make it seem like a selfish, ugly proposition. Even in her sixties, she’s an attractive woman capable of trading up.

It’s not that I’m unsympathetic; I’m not, but Clara knows me. When presented with a problem, I slip into analytic mode. I made a career out of it. Clara never cared about it. Stories of reading business situations, applying research and proposing a successful strategy bores her. Sarah, if not actually interested, always listened attentively and asked a few relevant questions. Clara, on several occasions, yawned. Matt hired me to consult on several of his projects.

According to standard “guy code,” I should advise her to leave Matt. In theory, a newly available highly attractive woman would either be available to the advisor or free up another highly attractive woman. The theory clearly did not work in college, so I doubt it would work later in life. A critical flaw may be that if you are not the type to draw a highly attractive woman. The number of available highly attractive women is inconsequential. On the other side of the equation, the best answer to the statement, “He’s says he will leave his wife for me,” is “Do you really want to get involved with a man who would leave his wife for another woman?” implying the answer should be “no.”

I dove into a deeper analysis. In college, I toyed with the notion that games teach valuable life lessons in a simpler, controlled manner. My college freinds played Spades to excess. In four handed spades, two players play against the other two. Better players deploy cards in manner to communicate to their partners what their hand contains and how to best cooperate to win the hand. A valuable lesson in team work, but a more valuable lesson in non-verbal communication through actions. Bi-weekly poker adventures have me considering a contrapositive proposition: life lessons teach valuable lessons on how to play games.

The Clara conundrum has put another focus on the proposition. Strategies to succeed in complex human interactions are transferable to other complex interactions. In this case, consider poker, relationships and the rules of financial investing.

Never invest more than you can afford to lose: the first rule of investing, as taught to me by my mentor, Casper James.

At first look, this rule applies more to poker than to relationships. The only sure winner at poker tables is the house who take a small part of each pot. Life is full of uncertainties, mastering poker helps people learn how to manage those uncertainties. Limiting exposure to acceptable losses, should they occur, allows investors to take emotion out of their calculations. Like investing, money is, should be, the only area of risk. Relationships are more complex. Each relationship is different as each participant may have different risk areas, and many participants seem unable to articulate their vulnerabilities and loss limits. Many are simply unaware, and they enter into relationships with little understanding not only what may happen, but likely consequences.

Strangely, people count emotion as a primary reason for relationships where investing and poker strive to remove emotion from decision making processes. Basing r4ealationships on emotion is probably a key mistake people make. Limiting risk to acceptable losses is designed to take anxiety, worry and dread. It does not make investors or poker players emotionless. They often feel joy, happiness and even elation. By reducing the potential for negative emotions, this simple rule paves the way for experiencing positive emotions, though of course, investors and poker players may experience little or no emotions.

Often, in movies and television, characters try to spark emotions, “get you to feel something,” in their partners by inflicting pain or negative emotion. The logical result would be that their partner would shy away from feelings. You’d think a better approach would be to engender joy and positive emotions.

Many people believe their love is real because it endures hard times. Sarah and I have traversed several rough patches, but we define our relationship by the good times, especially finding joy in challenging situations. Those are the best. Perhaps this investing rule transfers to relationships more than previously thought.

There’s nothing wrong with a profit: the second rule of investing.

This one may not be very transferable. In poker, the only time you can take a profit is by winning a hand. In investing, this rule is about cashing out an investment, or exit strategy. Investors leave long term diversified holdings (such as S&P 500 mutual funds) only for important life events. Alright, mostly death or to meet a post retirement goal like buying a sailboat and sailing around the world.

This rule has more to do with more speculative investing such as buying individual stocks. Several more rules apply to these investments, such as setting goals and limits. Many investors hold stocks in market stalwarts like General Motors, IBM and Microsoft, just as they hold onto indexed mutual funds, but many also speculate on smaller companies with more risk.

Since long term capital gains tax is lower than normal capital gains tax, some investors set their targets out a year hoping to meet their goal and pay less tax based on a false notion “It’s not what you make; it’s what you keep.” These investors tie up their money into riskier stocks for a year. Often the stock reaches, and even exceeds, its target price months early.

Although most negative emotions were taken out of investor’s actions with the first rule, greed creeps in. The second rule tells investors not to get greedy. There’s nothing wrong with a profit. Many forces will act on a stock’s price in the remaining months. To lock in the profit, get out of the investment. The old Wall Street saying, “Bulls make money; bears make money; pigs get slaughtered,” comes into play here. It’s good advice.

Poker players have a similar saying: “You know what beats a pair of aces; any two pair.” In Texas Holdem’ poker, pocket pairs (pocket refers to the two cards dealt to a player) can be very powerful. Many published strategies deal with how to play pocket pairs. With small pairs, limp in (minimal bets) and look for a set (three of a kind) on the flop (the first three communal cards). If the pocket smalls can get through the next round of betting without a large bet, proceed, otherwise fold. This is called slow-playing. Middle pairs can bet a little more aggressively, but they should, also, be slow-played.

This investment rule applies to large pairs. Most strategists suggest betting large enough to discourage other players from calling. Although this strategy most likely leads to stealing the blinds (taking the small bets each hand mandated by rules), there’s nothing wrong with a profit. Large pairs seem likely to win the hand outright, so many players slow play them hoping to win larger pots. According to an odds website (https://poker.stackexchange.com/questions/1428/pocket-aces-in-9-handed#:~:text=%22Statistics%22%20show%20that%20you%20will,to%20raise%20the%20bets%20high), pocket aces only wins the pot thirty percent of the time at nine handed tables (the most common number of players at the table) poker. That’s a very large risk, so it is better to steal the blinds and take a sure profit.

I remember the first time a friend complained, “Breaking up is hard to do.” It was my freshman year in college. “Not really,” I replied. “Just think of what you are doing to make your relationship work, and stop doing that.” In retrospect, that’s bad advice. By the time someone considers breaking up, at least one of the participants already stopped working on the relationship. They already got everything they wanted out of it. Unlike poker, relationships do not have hands and rules bringing them to an end.

Under pressure, remember why you made the investment in the first place: The third rule of investing.

Like the second rule, this involves exiting investments. Often stock prices decline before reaching targets, and sometimes they never reach the target. Both time and price decline pressure investors to sell at a loss or nominal profit.

While playing poker, I place a value on the cards dealt to me and adjust their valuation during the next three rounds (flop, turn and river).of common card (the board) revelation and betting To limit overall losses, I try not not to over bet the value of my hand. This leads me to play “tight.” Other players notice that I place limits on my hands and attempt forcing me to fold by placing large bets. They apply pressure. Along with hand valuation, I set a goal: large pair, straight flush, etc.

I like to play “suited connectors” (the seven and eight of spades for example) hoping that the board gives me a straight or a flush. Sometimes, the flop gives me two pairs, a much better than average hand. Another player may bet very large without an apparent reason (like an ace or king on the board). Since I hoped for a straight or flush, I fold.

Sarah and I met at a bar on a trivia contest night. I was impressed by the breadth of knowledge. It turns out that both of us desired to travel but did not want to do so alone. We discovered more commonalities and, more important, differences. I wanted to see archaeological significant places like Chichen Itza, Machu Picchu and the Egyptian pyramids. She prefers meandering through museums. Our first trip was to Rome, a win-win destination. Next month, we will visit London with a side trip to Stonehenge. We’ve endured over thirty years of marriage and are adjusting to both of us being retired and home a lot. Along the way, we have engaged in several fights, disappointment in our children and a trial separation, her idea, not mine. I believe, in the end, it’s the things we enjoy together that keeps us together.

Yesterday, I called Clara with my analysis and told her I planned on writing about it for my blog. She asked that I obfuscate details about her and Matt. Matt canceled our poker adventure and said it may be awhile before he’ll be up to going again.