Thursday, August 6, 2015

Five Things I Learned About Life Through Playing Poker

Hey everyone.

As some of you may or may not know, I'm an avid poker player. I've never played in a World Series of Poker event or anything like that (although it is a bucket list item of mine). And I'm not a professional by any means. But I've been playing fairly consistently for the past seven years and I've picked up a few life lessons along the way. Here are the six most important truths about life that I've gleaned from my time on the felt. 

1) It's important to focus on things that you can control (i.e. process, decision making) and not worry so much about things that are out of your control (results). 

Poker can be brutal sometimes. I remember one particular night in an underground cash game in NYC where I took the nastiest beat I ever took in my life. I picked up Aces - the best starting hand in poker - and of course I raised. My opponent reraised me. After some posturing, I moved all in.  I turned over my Aces and he turned over pocket Queens. I sat there, looking at the $600 in the middle of the table, waiting anxiously for the last of the five cards to be dealt so the dealer could push the chips in my direction. Statistically, at that point, I was an 80% favorite to win, but I knew my Aces could be cracked. The flop (the first three community cards shown) were A 2 3, all of different suits. Whew! I flopped a set. 

At this point, with only two cards to come, I was a 97% favorite to win the hand, but I still felt uneasy about the whole situation. I told the dealer, half-jokingly, half-seriously, "Don't do it". I was referring to him dealing out a statistically improbable situation - a Queen on the next card, followed by another Queen. Of course the next card was a Queen. I was still ahead in the hand, and still a massive favorite to win. But then I really started to sweat. "Don't do it dealer", I repeated. "Don't do it". My opponent needed the final Queen in the deck to beat me and of course, the deal burnt one card, and turned over that final Queen my opponent needed. I got up swiftly, wished everyone a good game, and then left. I felt like vomiting up the fish and chips I had eaten earlier.

Could I have done anything differently? Not really. I've played poker hands poorly before - lots of times in fact - but this time, I played my hand well. But yet, I still lost. This happens in life too. The high school valedictorian gets straight As, but gets rejected from all of her top choices. You never take a sip of alcohol, but get killed by a drunk driver. Life can be unfair, but ultimately, if you keep making good choices, you'll more than likely end up okay.

2) Being ready for profitable situations when they arise is crucial. So stay prepared and pay attention.

In live poker, because you see so few hands - maybe 40 or so an hour - most of the money that you win will probably in a few big hands over the course of any given poker session. Therefore, it's important that you're paying to your opponents' tendencies, even when you're not in a hand. If you're busy watching the game on the flat screen tv on the wall in front of your poker table, or ogling the cocktail waitress with the nice ass, you're going to be missing opportunities when they arise.

The same thing applies in life. You never know when opportunities are going to arise for you, so it's important that you have your "elevator pitch" ready. That you know the responsibilities of the person whose job you want, so that you can jump in immediately if they get fired. You get my drift.

3) It's important to reflect on your mistakes in order to get better.

In poker, all of the best players vigorously dissect the way they played a hand - whether they won or lost it - after their poker session is over. After you make a mistake in real life, you shouldn't just chalk it up to bad luck. Really ask yourself if there's something you could have done better to change the outcome. If not, that's fine. But it's important to consider that an action might have been a mistake. Even though I'm not at the top of any field just yet, I've seen this trait in others and it's done wonders for them.

4) Mental toughness can take you a long way.

Like I said earlier, bad stuff happens in poker as in life. And unfortunately, bad luck isn't distributed evenly throughout the universe. Some people are objectively more unlucky than others. Nonetheless, being able to look forward to a brighter day and push yourself onward will certainly open up more opportunities. As the saying goes, "Effort only releases its reward when one refuses to quit."

5) There are different paths to success.

In poker, the optimal strategy is to always be adapting to what your opponents are doing. However, there are general styles of play, such as tight-aggressive, or loose-aggressive. There are plenty of different styles that can lead to success. In life, the same thing applies. One can become wealthy through investing in real estate, the stock market, creating one's own business, or being a CEO. It's not so important what path you choose, so long as it's one you feel comfortable with. 

Thanks for reading and stay tuned!

JP $

Wednesday, August 5, 2015

When It Comes to Personal Finance, Don't Focus on the "Finance" Part to the Exclusion of the Personal Part

Hello everyone.

Today, on my Facebook page, I posted an article about how you should put a price tag on hard to quantify things in order to determine whether or not you are making the right financial decision. And I couldn't agree with myself more! :-D So many times in personal finance, the pundits emphasize the 'finance' part of personal finance, and understate the importance of the 'personal' part - failing to realize that the two are supposed to work in unison.

I think I've said this before in a prior post, or a prior YouTube video, but I think it bears repeating just to demonstrate my point. Many moons ago, when I was fresh out of law school, and looking for a job as a financial adviser, I was talking to a financial adviser whom I wanted to work for - let's call her "Cassie" - and she gave me some unsolicited advice. When I was telling her about the amount of student loans I had, and what that meant for the commission-based nature of financial advising, she told me that I should pay down my student loans at all costs. That makes sense to some extent, but that's not the stupid/crazy part of what she said. The crazy part came when she followed up her sentence about paying down my student loans as quickly as possible with..."even if it means not eating or skipping a few meals a day."

Now, I'm all for people getting out of debt. I'm all for people making sacrifices to achieve their goals, financial and otherwise. But not eating???!!! Skipping a few meals a day???!! She didn't even say "cut your grocery budget" or "eat ramen". She just flat out said pay down your loans even if it means not eating. That's by far one of the stupidest things that I've ever heard. How will I have the energy to do work if I'm not eating? How can I focus on an empty stomach?

There are plenty more so called "advisers" out who will tell you a whole bunch of non-sense, like retirement is the only thing that you should be focused on, or that maxing out your 401(K) is the best idea in the world. Some of these platitudes are spouted by well-meaning people and some of it might even be good advice. But the advice is not for everyone. What this advice often fails to do is take into account that people want to live, and not just wait until 60 years of age to enjoy their life. Or live a life purely ruled by spreadsheets and numbers.

For instance, if you value being able to spend your time as you choose or be a freelancer or want retire early and see the world, maybe you should get aggressive with your investments and place all of your money into a taxable account instead of retirement accounts . If you value family and want to stay home with your kids while one spouse works, that might be a 'bad' financial decision looking at pure numbers, but it might be an excellent decision in terms of the psychic/emotional benefits that it provides for you, your spouse, and your family. If you don't care about using credit anytime in the near future, but would rather take a lower paying and more fulfilling job,  maybe you shouldn't focus on aggressively paying off all of your debt as soon as possible. (*Disclaimer: You should always pay off your credit card debt as soon as possible as the interest rates are so extraordinarily high.)

The moral of the story is that everyone has different priorities. Sometimes those priorities might conflict with conventional financial advice and may seem like they lead to 'bad' financial decisions. However, the whole point of having your finances in order is to be happy. We all hope to make good financial decisions because we want more money, or at least enough money to live, and this will make us happy. So why not just prioritize your version of happiness - which is intensely subjective and personal - instead of making decisions solely based on numbers and listening to pundits/financial advisers who tell us not to eat.

Thanks for reading and stay tuned!

JP $