Part II
Relevance to the Current Economic Crisis
In my last newsletter I wrote about winning an on-line poker tournament where the prize was a free seat at this year’s (2008) World Series of Poker (WSOP) $10,000 No-Limit Texas Hold ‘em “Main Event”. I wrote about the significance of this event for me personally and the connections that I found between playing poker and my professional activities as a psychotherapist and executive coach. Today’s newsletter continues down that path and updates you on my tournament experience, its application to my thinking and its relevance to the recent crisis in our credit and financial institutions.
This year’s tournament had over 6900 participants. The tournament itself was spread over seven 10-hour days of poker play. The top 666 players (the last to be eliminated) each won at least $21,200 and the prizes increased to $9,100,000 for first place. I came in 780th (top 12%), played over 25 hours of poker and missed “the money” by 114 places. I was eliminated when I made a risky, but strategically correct all-in (all of my chips) bet, with a starting hand (“pocket”) of Ace, King, and lost to another player’s pocket Queens. The subsequent five cards did not improve my hand and allowed my opponent's cards to hold up.
I lost my last hand fully aware that I could lose, but also knowing that the odds of my winning, the pressure my all-in bet put on my opponents and the amount of chips I could win if the cards went my way made the bet a wise one strategically. Even though I lost the hand, I felt comfortable that I had made the right decision under pressure. I was satisfied that I acted both mindfully and strategically, not only in this one hand, but in the hundreds of hands leading up to this one. I left the tournament having achieved a terrific result and validating that my style of play both manages risk and allows me to compete successfully.
As I write this, Fannie Mae, Freddie Mac, Lehman, Merrill Lynch, AIG, Washington Mutual, Wachovia and many of our other financial institutions have either been sold or are in the process of being bailed out by our government. While the skills that are necessary to manage our financial system and its institutions are clearly not the same as those required to play poker, it does occur to me that many of the skills I use to play poker mindfully would have been useful in preventing the financial meltdown that is currently taking place. A parallel I see is that the failure of these companies was the result of the deregulation of a financial system that allowed too many of its participants to disconnect from the risk that they were assuming. Any individual or institution that plays a game/business with inherent risk, plays poorly if they are unable or unwilling to monitor the risk factors present in their activity at all times, or have a monitoring system that checks and effectively regulates their actions for them. When I play poker I do well only as long as I can keep my attention focused, modulate my moods, evaluate my odds and stay connected to the game taking place in front of me—in other words—as long as I stay regulated. Apparently too many bankers and risk managers, spurred on by competitive pressure and the absence of regulation, were unable to keep track of the business in front of them.
Mindful poker play teaches one much about managing risk. Because in tournament Texas Hold ‘em only the last man standing wins, it is sometimes strategically correct and mindful to make very big and risky bets. When I made the all-in bet that caused my elimination from the tournament, for example, I knew that my odds of winning the hand were approximately 50/50. I took this risk anyway for a variety of reasons, including that at that particular stage of the tournament my need to gain chips outweighed the benefit of saving chips (as the mandatory bets were depleting my remaining chip stack and making my continuing survival in the tournament problematic). A 50/50 bet to gain a lot of chips was actually less risky than avoiding any risk altogether and temporarily preserving the smaller amount of chips that I had left. Even though this decision eliminated me from the tournament, it was the type of decision in my game that over time reduces risk and leads to success more often than it leads to failure. I was also aware of and able to accept the consequences of my action.
The participants in our banking and credit institutions, however, seemingly played their game blinded by the opportunity to profit and seemingly blinded to the possibility of loss. As editorial writer Thomas G. Dolan said in the September 22 issue of Barron’s,
“Banks lent more money than they should have to people who were borrowing more money than they should have, mostly on the strength of the idea that real estate would appreciate enough to cover up any problems.”
A sound player would never assume, as Dolan postulates in regards to the actions of those in the real estate and credit markets that they would always get cards that are good enough “to cover up any problem.” A mindful player knows the risks and knows that no one will bail him out if he is wrong. If we are wrong we lose, if we are right we win. Our banks and credit managers should know this as well.
When high-risk mortgages and credit instruments were sold and then repackaged as “high quality,” it set in motion a disconnect between actual and represented risk. As Dolan indicated, it encouraged an assumption that real estate would only go up, despite the fact that this has never been an “up only” reality. Purchasers were willing to invest under this illusion, because it allowed them to purchase homes that they otherwise would never have been able to afford. Institutions that sold these mortgages perpetuated this fraud in order to make short-term profits that were too tempting to turn down. Our government and regulating bodies joined in, and in some cases fostered, an ideology that encouraged this process. Their ideological belief in a free and unregulated market was aligned with their denial about their own greed and their need for regulation.
Mindful poker teaches a player never to make a bet that is riskier than it needs to be. A bet should always be realistic, calculated, grounded in the relationship between risk and reward and it should always consider the position, tendencies and motives of one’s competition. Richard Bernstein, Chief Investment Strategist at Merrill Lynch said in the September 29 issue of Barron’s:
“The idea that you could remove risk from the marketplace really made people speculate. What the credit market did was to expand that speculation to the broader marketplace.”In order to be more successful in the way we manage ourselves, our businesses and our government we must never lose sight of the fact that risk is an inherent part of life. If we are to manage risk successfully, rather than speculate, we must act with our feet firmly planted, our bodies and minds calm, our attention alert and we must be able to interact in an open, interested and empowered fashion. Partisan, divisive, rigid, grandiose, magical, detached, uninterested, greedy or uninvolved approaches simply cannot be effective.
Friday, November 28, 2008
Sunday, May 4, 2008
Thoughts On Mindful Poker
LOVE, WORK, THE SELF, THE BODY, INVESTING, RISK and POKER by Bob Silverstein, MA, LCSW
I don’t know if my title left anything out. No, I think I covered it all. Sigmund Freud spoke of love and work as the two activities that best define an individual’s interaction with the world. He also wrote eloquently about the connection between our bodies and our psychological development. As we develop physically and psychologically, our bodies and our brains process and store our experiences in an interdependent and interactive manner. The self is not only an emotional, psychological and linguistic presentation of who we are, but a physical reenactment of all that we have felt, experienced and become.
For those of you who have studied trauma specialists such as Patricia Ogden and Bessel van der Kolk, my personal revelation may not be that surprising. From their teachings we have learned that trauma and excessive stress can overwhelm our ability to function normally and cause our thinking, emotions, and reactions to become distorted. In fact, we can only interact well with others and process information accurately when we are not overwhelmed, agitated, numb or detached.
For me, playing poker is as much a grand experiment as an avocation. The game provides me with the opportunity to regularly recognize and separate optimal from less than optimal states of being and to gauge the results of doing so. When I am in a calm and focused place, I win far more often than when I’m distracted or preoccupied. Because I don’t want to lose and the benefits of winning are so tangible, it becomes very clear why I MUST stop messing around, why I MUST NOT indulge the less than optimal parts of myself, and get myself back to a better-feeling and functioning state of being.
In my coaching and counseling practice I work with a number of investment professionals who originally came to see me because they were functioning less than optimally, making mistakes or behaving badly on their jobs. My primary task is often to help them to reengage with their work assignments in a more focused and less hyper-manic manner. I often observe that when these bright and motivated individuals run into trouble at work, they have “left their bodies” and they need to learn some of the tools that I have learned from poker and from my study of trauma and its effect on the body and the brain. Just as I have experienced in playing poker, they often discover that being more mindful of what is happening inside their body has a direct effect on what is happening in their brain. Understanding this connection helps them to achieve and maintain a clearer focus as they pursue their goals. These individuals often discover that it is not primarily about the competition, but as the legendary poker player Doyle Brunson said in Super System: A Course on Power Poker (pg.40):
Sure, you want to study the emotional makeup of your opponents. But of all the players at the Poker table, the one whose capabilities and limitations are going to affect you the most, is the one sitting in your chair.
When investment professionals learn this lesson, it also often produces a corresponding demonstration of the financial and emotional benefits of mindfully reconnecting to themselves.
Recently, a colleague called to refer an investment professional to me for coaching. After we spoke about the referral, I told her that I had recently won a free online poker tournament sponsored by the Miller Brewing Company. The prize package includes a $10,000 seat in next year’s Texas Hold ‘em event at the World Series of Poker in
Whether it’s an investment professional, poker player, or psychotherapist sitting in the chair, being able to recognize and process what is going on inside oneself in real time and under stressful conditions is the single greatest determinant of success. Why does a person drift off and lose their attention at certain times or when facing particular challenges? What can they learn from tightness or a particular sensation in specific parts of their body? Why do people take random events outside of their control personally? How do they feel about winning or losing to opponents and how does this affect their actions? More importantly, how does one learn to recognize and modify these distractions so that they can maintain their focus on the challenge before them rather than managing their reactions to it?
Like my colleague, many of you might have concerns about the possibility of my having a healthy relationship to a risky and at times addictive activity like poker. You might also question the wisdom of applying the knowledge that I have achieved from playing poker to teaching people how to manage risks more successfully. After all, we have all been taught correctly that gambling, along with many other risky activities can be both addictive and destructive. For many sound clinical reasons we encourage abstinence as the healthiest and safest choice for many of our clients. For some people however, the benefits of dealing with risk consciously and conscientiously, rather than avoiding it altogether, are tangible. For example, when people play poker and actively manage its inherent risks, they can gain experience regulating their impulsive behavior, facing fears, socializing, identifying internal activity and belief states, exercising mental functions, learning self care techniques and relaxing in the face of crisis.
When one plays a game of managing risk, like poker, where few hands are certain winners, a person also gains active risk management skills. In order to do well in poker, a player must decide when it is helpful to take a risk and when it is not. Taking unreasonable and impulsive risks is more often than not costly, but avoiding reasonable risks altogether ensures that a player will lose; for example, there are mandatory bets in poker called “blinds” and “antes” that will eventually deplete one’s chips if a player is not taking additional risks during the course of the game. The learning parallel for me is that playing it safe and abstaining from all but the safest situations is not a winning strategy in poker or in life. Rather, it is a strategy that masquerades as wisdom, but is often an attempt to avoid making mistakes.
Learning to work with the risky poker situations that are an inherent part of each game is an ongoing primer in making decisions in the face of fear, concern and vulnerability. Poker teaches us that managing the risks of the game is not only beneficial but absolutely necessary. It also can show us that managing risk directly and actively is often far more meaningful and joyful than playing it safe or not playing at all. Poker is a game of risk management that can promote safety, in real time, by placing an individual within a process that facilitates repeated learning about how to manage challenging decisions, circumstances, cognitive problems and people.
Playing poker mindfully can be metaphorically similar to leading a more engaged and richer life. It requires an awareness of one’s self, body, cognitive processes, and surroundings. It provides a good framework for dealing with adversity and a philosophy for a more active “risk management.” I have learned through my many years of working with clients, moreover, that whether I like it or not people always have, always will, and cannot avoid dealing with risk in their professions and lives. I find that teaching my clients to manage necessary and reasonable risk actively and mindfully, rather than simply avoiding it, has provided them with an empowering and practical tool to engage with life’s risks.
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