Re: Should You Quit Your Day Job? — Part I
 

You wrote: "Booms and busts are relatively rare events."

True, but the stock market has been going through the same cycles for centuries. Even though the cycles take many years, there has been enough time to see a lot of them.

Regards,

Al

Re: Should You Quit Your Day Job? — Part I
 

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You wrote: "Booms and busts are relatively rare events."

True, but the stock market has been going through the same cycles for centuries. Even though the cycles take many years, there has been enough time to see a lot of them.

Regards,

Al

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Hi Al

Maybe I haven't made my point clear but its nothing to do with the how many cycles we have seem. I think this is a bit of a distraction from the main debate but the reason I think the analogy is weak is that the two systems operate to a different dynamic as can be seen by considering the feedback in the system during stable phases. This dynamic is very different so analogies between the two are weak.

I take your point that suckers who believe nothing can go wrong in the stockmarket are making the same mistake as suckers who think nothing can go wrong in the poker world and if that's the extent of your analogy then fine.

However comparing the risk to +ev stockmarket investors with the risk to winning online poker players is likely to run into big trouble due, at least, to the different dymanics in the system.

chez

Re: Should You Quit Your Day Job? — Part I
 

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You wrote: "Booms and busts are relatively rare events."

True, but the stock market has been going through the same cycles for centuries. Even though the cycles take many years, there has been enough time to see a lot of them.

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The stock market is not the proper comparison because poker is an industry not a market.

Right now poker is experiencing a boom in demand (fish money) which is leading to a rapid growth in supply (poker rooms) and a rapid influx of labor (poker pros). Oversupply will lead to excessive competition for fish money and result in a shakeout that will put many poker rooms out of business and force many pros to quit.

In a normal business the departure of marginal providers eventually rebalances supply and demand and a new cycle starts.

The danger for poker is that poker fish may not be a fully renewable resource. The demand is currently very high because poker is a fad, but this may not last. The business cycle of oversupply and competition will occur even if poker remains popular. But if poker loses popularity the resulting crash will become much worse and could last a very long time. This is especially true because it is very hard to force an online poker pro out of business. Even if he has to get a day job he may keep coming back on a parttime basis with the option of becoming fulltime as soon as conditions improve a little.

Re: Should You Quit Your Day Job? — Part I
 

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Source?

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http://sports.espn.go.com/espn/page2...0719&num=0

Re: Should You Quit Your Day Job? — Part I
 

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Source?

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http://sports.espn.go.com/espn/page2...0719&num=0

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Actually, now that I think of it, this makes perfect sense.

This means that 92-93% of players don't turn a profit. This is where we are making our money from.

This article doesn't say what portion of those 92-93% are actually people playing with any strategy. My guess would be only a fraction of them.

Re: Should You Quit Your Day Job? — Part I
 

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Right now poker is experiencing a boom in demand (fish money) which is leading to a rapid growth in supply (poker rooms) and a rapid influx of labor (poker pros). Oversupply will lead to excessive competition for fish money and result in a shakeout that will put many poker rooms out of business and force many pros to quit.


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Great analysis!... Kind of a side point, but do you think the online poker boom (which is partly fueled by the fact that the potential market has increased beyond those willing to travel to a casino, to everyone) will result in the eventual closing of B&M poker rooms? (and consequently that we won't be in a bubble extreme until that occurs, therefore we are simply in a growth spurt now)

Interested in any thoughts on this.

Re: Should You Quit Your Day Job? — Part I
 

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[D]o you think the online poker boom (which is partly fueled by the fact that the potential market has increased beyond those willing to travel to a casino, to everyone) will result in the eventual closing of B&M poker rooms? (and consequently that we won't be in a bubble extreme until that occurs, therefore we are simply in a growth spurt now)

Interested in any thoughts on this.

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My short answer (guess): not likely. Fish going to a B&M room are doing it for an experience that goes far beyond what online gaming can offer. For the 10% that are pros/semipros/accomplished amateurs, the marginal advantages of online (low rake, no tips, no commute) are very important. For the 90% fish, they pale in comparison to what they're already spending for a week in Vegas, AC, Foxwoods, or wherever. More important are jovial atmosphere, cute waitresses, free drinks, etc.

Granted, I play low limits so I'm referring to the clientele there. Maybe $30/60 fish are all staying home giving away money in their underwear now.

Re: Should You Quit Your Day Job? — Part I
 

[ QUOTE ]
Great analysis!... Kind of a side point, but do you think the online poker boom (which is partly fueled by the fact that the potential market has increased beyond those willing to travel to a casino, to everyone) will result in the eventual closing of B&M poker rooms? (and consequently that we won't be in a bubble extreme until that occurs, therefore we are simply in a growth spurt now)

Interested in any thoughts on this.

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I don't like the term "bubble" because in my mind it's more of a market concept rather than a business cycle concept.

But in both cases it is generally a lot easier to see that an unsustainable structure is being created than it is to predict the time of its collapse. You know that little kid can't keep blowing his bubble gum forever, but the radius of the bubble when it finally pops is pretty much anyone's guess.

Unpredictable events, such as the sudden collapse of a major online site due to fraud, are likely to play a major role in how this comes out. The biggest open question in my view is whether poker will virtually die, just another burnt out fad enjoying only a tiny fraction of its present popularity, or whether it will mature into a mainstream entertainment industry like bowling or skiing.

Re: Should You Quit Your Day Job? — Part I
 

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The stock market is not the proper comparison

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One of the main differences is that you can put your money in the stock market (S&P500 index), compete against a pro stock picker and breakeven, then over time you will get rich as the market is based on the economy which will expand.

If you play a bunch of poker against a pro and break even you will both lose as the house gets the money via rake.

--Greg

Re: Should You Quit Your Day Job? — Part I
 

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The danger for poker is that poker fish may not be a fully renewable resource. The demand is currently very high because poker is a fad, but this may not last. The business cycle of oversupply and competition will occur even if poker remains popular. But if poker loses popularity the resulting crash will become much worse and could last a very long time. This is especially true because it is very hard to force an online poker pro out of business. Even if he has to get a day job he may keep coming back on a parttime basis with the option of becoming fulltime as soon as conditions improve a little.

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I agree with your analysis that the current setup in the poker world is unsustainable. There has been exponential growth in the number of fish playing in recent years, and at some point that growth is going to level out (and eventually there will likely be a decline in fish, where more bust out than start playing).

I am not so sure about your last claim though. I agree that, psychologically, this is how many pros will approach the situation. However, I suspect a lot of them will end up being destroyed by variance. They will go back to play games in which they are only marginal winners (because of the increased difficulty in the competition) and will likely go bust because of the steep bankroll requirements needed to play professionally and because they will likely overestimate their true win rate. Unfortunately, you may see players that can make enough to live on when they are running fair to good, but be forced into debt as soon as they run poor to bad. (Of course, they are supposed to have living expenses saved for these rough stretches, but many will not have adequate savings to handle the increased variance that comes from playing a game in which you are a more marginal winner.) So while they may wish to return to the poker economy, they will likely only last their very shortly before going broke again. This will minimize their impact, as they will be taking a relatively small amount of money from the fish. (BTW, how can I say they are taking money from the fish when I just said they will go broke? Most of them will go broke, but some will run good enough to start with that they develop an adequate bankroll. Averaging everything out, I suspect these players will take a small amount of fish money.)