The 2+2 Hedge Fund

[JaBlue]

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Meanwhile the year I graduated there were 18 National Merit Finalists at Teaneck High. More than any other public high school in New Jersey.

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Good SAT scores aren't really that impressive...

[MMMMMM]

Leonardo,

It takes certain amount of specialized knowledge, as well as the ability to think well, to beat the market. A great poker player, or say a genius from another field, would be expected to be at a disadvantage in the markets without the proper knowledge base. Knowledge is not intelligence, however.

Someone who can think very well (and has good emotional control) should be able to do well in the markets once they acquire the requisite knowledge base and experience. That acquisition of knowledge, of course, takes time. Many poker pros have not had the time (or perhaps interest) to acquire such a knowledge base.

I would suppose that, on average, market pros might well be smarter than poker pros. However if you took some of the smartest poker pros, and trained them properly, and they acquired the necessary knowledge base and experience, I think they should do very well in that field, too, since both fields require many of the same skills: evaluation of "edge", risk management, emotional control, etc..

One thing you should realize is that many poker pros just sort of "found" themselves in this profession--they didn't exactly set out to be a poker pro. But the money seemed decent and the hours flexible, so they stayed on. It isn't easy for most people to deeply study a new field while working full-time in another profession. So your argument that "if they could be doing it, they would" does not really apply in many cases. Additionally, one can get started in poker on a relative shoestring as compared to the markets--which is exactly what many did.

Most poker pros can't take the time out to study the markets full-time for a couple of years. They aren't able to "learn the markets on the job" as many right out of school did, unless they want to give up poker and go work for an investment or trading firm for a while (if they even have the background to land such a job). So I don't think your comparisons are quite fair.

Market pros are in a game that pays more on average and has more potential. That doesn't mean they are all necessarily smarter. You can't say that all heart and brain surgeons are necessarily smarter than pediatricians or dentists. Heart and brain surgeons earn a lot more, though.

Now, I know you didn't exactly say "ALL" regarding market pros vs. poker players. But you did say or imply that the smartest poker players couldn't be anywhere near as smart as the smartest market pros. That just isn't necessarily the case, although I would guess that they are smarter on average.

Didn't Richard Dennis show that reasonably intelligent people could be trained to beat the markets (at least back then?) I can't imagine that very smart poker players who are reasonably successful at poker couldn't also be trained to beat the markets. But for most people, the time required to take sabbaticals from earning, in order to learn, is a big stumbling block in one form or another. So too may be allocating a 6-figure bankroll just for trading--especially if one's knowledge is primarily theoretical at first. And allocating less would probably not match the potential earn that could be achieved by using that money instead as a poker bbankroll--especially considering that mistakes may be made when first gaining live trading experience.

[TransientR]

Fine post!

Given the finite amount of time we have, and the complexity of doing well most things that are worthwhile, you have to make choices on where to direct your energies. Plus you need to have enthusiasm to maximize your talents. If your intelligent enough to be a doctor, but enjoy playing poker more, better to be a happy poker player than a miserable doctor.

Frank

[bogey]

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"Long-time lurker, first time poster.

Even as a person who often mocks the "Ivy's", this one made me laugh so hard I almost peed myself.

Penn may not be great, but if Teaneck is your standard and you're the poker guru - I'm no longer intimidated .

Having the top 20 @ Teaneck deserve to get in to Penn - maybe and I mean maybe.

Not meeting any of their equal during your time there - social problem - nothing less, nothing more."

Can someone explain to me what he just said? Meanwhile the year I graduated there were 18 National Merit Finalists at Teaneck High. More than any other public high school in New Jersey.

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Translation
Hes saying Penn is a better school than you gave it credit for. Hes saying the reason you didn't meet anyone smarter than the top 20 in your high school there is because you were a loser.
End Translation

[Dan Mezick]

Winning poker players (and Sklansky disciples) who suspect they could learn to be winning market traders may find the following post extremely interesting.

The post has a link to an academic paper that describes three types of traders: winners, utilitarians, and "futiles". These insights apply also to types of poker players.

The paper draws parallels between the game of trading and the game of poker.

I posted it in the "Stock Market" forum rather than here in the WPT Forum. The link below gets you there.

Those that are enjoying this thread are sure to enjoy this very interesting research paper.



Interesting Paper on Traders and Poker Players

Cheers,
Dan++

[David Sklansky]

Translation
"Hes saying Penn is a better school than you gave it credit for. Hes saying the reason you didn't meet anyone smarter than the top 20 in your high school there is because you were a loser.
End Translation"

Thanks. Anyway in this particular case the point I was making is almost common knowledge. As Leonardo himself pointed out, (unwittingly making my own point for me), Penn is not one of the top eight schools and does not normally attract brilliant students. About three percent (higher than most public schools) of Teaneck High School students could be called brilliant and only one of them even applied to Penn (the rest went to Harvard, Yale, MIT etc). Thus IF it is true that Wharton undergraduates who get into the markets do way better than average, it would stand to reason that the those who are smarter than Wharton students, could, if they tried, on average do better. That's all I'm saying.

[hoyaboy1]

In my experience business students are always less impressive than their hard science or social science counterparts. At least, that is the way it is at Georgetown and schools my friends go to.

Out of curiosity, what are your top 8 schools (US News, for example, puts Penn 4th) and what is the cutoff for you to consider a student brilliant?

[Dan Mezick]

Ya, poker is a degenerate gambler's activity-- not for serious investors.

Ya, Peter Lynch. Fidelity. What does he say about poker?


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In Peter Lynch’s book on his investment strategy, he emphasizes that traders should learn the elements of the game of Poker to increase their understanding of investing.

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See:
Peter Lynch Comments

[ceczar]

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Thus IF it is true that Wharton undergraduates who get into the markets do way better than average, it would stand to reason that the those who are smarter than Wharton students, could, if they tried, on average do better. That's all I'm saying.

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I think most would agree this statement is perfectly reasonable.

But it's accompanied by some other thoughts that seem so unlikely they reflects poorly on your credibility on such matters.

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Thanks. Anyway in this particular case the point I was making is almost common knowledge. As Leonardo himself pointed out, (unwittingly making my own point for me), Penn is not one of the top eight schools and does not normally attract brilliant students.

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(I didn't go to Penn, so i'm not being defensive) While it is likely Wharton attracts much of the mediocrity of Penn, with the brightest of the school being attracted to the science or liberal arts departments, Penn is clearly one of the top schools in the country. While the brilliant are more likely to be drawn to a stanford, harvard or MIT, not all brilliant students are guaranteed to get into those schools, and Penn is certainly thought of as a reasonable alternative. I'm sure there are hundreds of National Merit Finalists at Penn, which seems to impress you. You are certainly not going to have math prodigies from Europe coming to Penn (and certainly not Wharton undergrad). Likewise for the best prepared brilliant young minds here. But it would be very surprising to me if the quality of student at Penn was a whole order of magnitude below a school such as stanford.

But whatever...it's possible to have a standard of quality to which Wharton students just don't measure up, and however arrogant that may seem to some, it's your standard and that's fine...except for your ridiculous assertion that 3% of your public school was brilliant:

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About three percent (higher than most public schools) of Teaneck High School students could be called brilliant and only one of them even applied to Penn (the rest went to Harvard, Yale, MIT etc).

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While possible, it seems so implausible, especially given your rigid standards.
It seems a lot more like the people who would claim that everyone on their high school football team would start for the Harvard team (because Ivy football is so bad). That's slightly more understandable coming from the texas state champions high school, but coming from a small connecticut school sounds just silly.

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Thus IF it is true that Wharton undergraduates who get into the markets do way better than average, it would stand to reason that the those who are smarter than Wharton students, could, if they tried, on average do better. That's all I'm saying.

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I also think there is a problem with this assertion. I'm sure most wharton grads (undergraduate) do fine on Wall St. But that just means that they are likely to get a job at a big bank and have reasonable job security. I'm not sure the average Wharton grad does better than average when we use running a successful hedge fund or trading desk as the measuring pole. In my experience, the people who are successful in those roles are smarter than the average harvard undergrad, to use a school we can agree attracts top students.

[sfer]

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The only mediocrity that gets paid on Wall Street are the sell-side brokers -- in other words, salesmen. They are the equivalent of the casino's rake when it comes to the markets -- even the worst poker rooms can make money as long as there are people desperate enough to want to play the game. Mediocre traders on the other hand either eventually bust out (90%+ is likely) or survive and learn long enough to become superior traders. You really need to rise to the top in this game to stay alive, and there is no such thing as dropping down to a lower limit after a bad run in the markets.

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Please. The only advantage most Wall Streets have over other people is a higher threshold for pain.