all_in_poker_musical

Life Is A Gamble, Are You All-In?

I’m not a great poker player, but I love the game. Texas Hold ‘Em, please.

The thing I love most about Hold ’em? Honestly, it’s people watching through all of it. The shuffle. The cut. The deal. That first read of the cards. And, of course, the plays.

All those faces at the table through each stage. And, of course, the cussin’ smokin’ & drinkin’ is fun too.

For those who know James Altucher, you know his relentless determination playing poker everyday for a year is part hero/part tragedy: the flawed hero. Part dogged obsession. Part ‘avoid the reality of his life’. Part zen. You empathize, despise, and worship him all at once like you would with any riddle wrapped in an enigma.

But like with anything, you have to know your limits. And James did. He wanted to live differently, so he did. He walked away from the game. He saw the cost & benefit to his life and made a change. No matter what had happened up to that point to keep him coming back, it was no longer enough. And James will tell you the first lesson before you start down the road of fortune and fame on the poker tables: you never walk into a room to “get noticed”, unless you’re ready to play a real game — or look like an idiot losing your money. No, you walk into the room ready to play the game. Your game.

I just finished Josh Brown’s book, Backstage Wall Street. Now, you want to see someone go All-In? I gotta tell you, he did it in this book. He’s found some truly great nuggets of Wall Street history among a field of books that have been panning that mine for years. Like, the YMCA roommates who met just before they started one of the largest firms on Wall Street. Or how integral Chuck Schwab’s uncle was to creating the firm that changed the face of Wall Street.

Josh’s fantastic wordsmithery & storytelling live on in book form, even if his editor probably did make him cut out a ton of stuff. In his breathless book, he talks about “The Pitch”. And it was like I was sitting at the desk next to him. All of the days we hammered the phones 6 days a week. 300 dials a day. Anyone who didn’t, didn’t make it.

When I called you, I didn’t want to make a sale — all I wanted was a cup of coffee, preferably with you. If I did convince you 20 minutes and a cup of coffee was worth your time, it was 90% likely you’d become a client. That was my stat. 9 out of 10 approved upon meeting me. Not 100%. 90%. I wasn’t really selling anything but the truth, or the half-truths I’d been fed to that point in my career. I never claimed to beat the market by a mile or have a new system to make money in “any market”. I also didn’t grab the attention of people with $20 million because I was never allocated any of the hot IPOs, the currency of the dotcom era — as it turned out, by the time I was in the game the players were already on the field & it was the 9th inning. Some twisted fate to start in August of 2000, I suppose. But that wasn’t the reason I wasn’t a ‘breakout’ success — because I couldn’t lie or sell the promise of a better tomorrow with sizzling returns. It wasn’t my timing — It was something else.

The 10%

The Pareto Principle, quoted by every Wall Street branch manager who half-read some inspirational sales book, tells us about the 80/20 rule. Basically, focus on the 20% to make big changes. But I think if you really want to be great, you’re better off focusing on the 10% holding you back. Not that they’re necessarily your weaknesses. They’re actually probably strengths that you’ve just underutilized, or worse, ignored.

Some of my 10% was because I was on the wrong side of the table which Josh does a really great job at illustrating in his book. See, in the game of Wall Street — the house always wins and in their casino your broker is a lowly dealer. And when I wasn’t dealing, I was taking my earnings & sitting at the same table with the rest of the fish.

If you really think about it, in the face of today and everything you know, investing, in its most basic element, is nothing more than “betting” that someday tomorrow is going to be better; Or not. For a company, an asset class, an economy, or chart.

I hate the gambling/investing analogy because this isn’t a trivial card game but let’s face it, investing in the market really is legalized gambling, isn’t it? Maybe it’s a chart formation, or some really out-of-whack run on the table that has left utilities out in the cold & now they’re “due”. Or the fundamentals, oh the fundamentals with hundreds of analysts culling spreadsheets. Or maybe it’s that Apple will continue to reinvent the world in a way that only Apple can; And that we’ll continue to love their vision… no matter what your reasoning for sitting at the table, you’re thinking (hoping) that your next hand will be the winner. Now if that’s not gambling, what is?

Even you index fund investors, you’re betting. Sure, you’re sipping on your diet Pepsi like grandma at the nickel slots– but you’re there. You’re betting that 20 years from now there will be more people, buying more stuff, that there’ll be more food on the buffet, more electricity, more, more, more. Instead of taking that vacation today or seeing what life outside of the casino may bring you. You’re just betting on the whole lot of us, whether its companies knowingly poisoning rivers & streams because the fines are cheaper than the revenue or investing in companies truly succeeding while doing the “right thing” — you’re betting on all of it.

In the end, I realized, we realized (Josh & I) — and hopefully your broker & you, that we are the fish at the table. And just like the fish hitting up the ATM “just one more time”, investors keep coming back for more. Because Wall Street is like James Altucher, part hero/part tragedy. Part obsession with “more” & “better”. Partly avoiding the reality of how little value there probably will be from the next move on the crowded table. And, of course, the zen-like constant nature of it all. The Too Big To Fail Banks will keep spending mountains of marketing dollars on useless tchotchkes and advertising to keep you believing in the dream that you can beat Vegas at its own game. You can’t blame the dealer. Or the people in the pit. Or even the people at the table. That 10% is the house’s — always will be. It’s best just to walk away from that table, even though, now, the insight is valuable, in the end the cost is still too high.

My 10%

So, I walked away. But the real reason I’ve been a 90% success resonated with me a couple of nights ago; It’s not because I can’t get 100% of the people to like me or trust me, or see the value I bring. Even if I did become Mr. 100%, that’s not the stat that actually matters in the larger scheme of things. The reason I’ve always been Mr. 90% is because I’ve always held back. And it’s worked for me. Or I should say, I’ve held back 90% of the time. I don’t get too excited or sad about anything — I won’t allow myself to. I didn’t get too excited about my wedding, or any of my graduations, or making Eagle Scout — or the birth of either of my two sons. If I win the game, there’s the next game. Or if I have a good day or year, I remind myself that the next deal could be the perfect storm. So, you hold back. You manage your pile of cash according to what you think you have in your hand. And even through my success, I’ve always played my hands like I’m the short stack at the table — always on the defense.

Don’t get me wrong — I’ve been the hero of games, won the heart of the “the girl”, even fought men twice my size — but those all-in moments over my adult life have started to blur into days and months, and even years, of going through the motions, betting another small hand just to see the cards.

When I was a kid, I was always all-in. You might have been too, you rebel. Testosterone & hormones have a tendency to tap into that vein very well. It’s easier when you have “nothing” to lose.

So, in my young adult life I worked more than any of them. I read more than all of them. “Financial success will be mine, and I will be at this table everyday until I achieve it.” And then you realize, avoiding life while chasing the cards for financial success just isn’t what I want anymore as a real grown-up. I’m married. I want a loving relationship with my kids. Sure, I have a mortgage to pay but I can’t f#ck people over, I just can’t — sorry. And I can’t afford to lose clients money with big bets or mistakes or wrong calls. And then the firm makes those big bets, mistakes, and wrong calls — nearly ‘killing’ all of us. And then changes the rules again. And again. And again. Always winning. So, you start to hold back, more and more with each hand. Anything to keep playing the game, without losing the stack or your somehow revered seat at the table.

And here I am 12 years later. Still doing it. Still managing the stack, in someways, like I’m still a 20-something. Afraid to open up the emotional and financial pursestrings & start making some sizable bets. Whether on myself or the firm I started when I left Wall Street’s table.

But there’s been a couple of slaps in my face to “wake up” lately.

First, my oldest son will be 6 years old next month, and last week just got his first $2 bill during the tooth fairy’s second visit to his pillow. There’s a third tooth wiggling already. He asks me about the stock market and can read my poker face, knowing when it’s been a tough day (or a good day lately). I show him his market reports. Green is good, he’s known this to be the truth since he was 3. He knows what he owns and thinks that robots vacuuming our floors is just the beginning. He’s betting on a better tomorrow twenty years from now. He’s starting to save his money instead of spending it all at the candy store. He asks me about the homeless people we walk past. It’s my chance to teach him about things, real things. Not just the ABCs anymore. holy shit. I’m a dad.

I’ve coached his teams, taken him camping, gone through the motions of what a good dad should do — but never truly enjoying the hand I’ve been dealt. Too afraid of what tomorrow may bring: sickness, some terrible unforeseen accident, that he’ll be “different” or that my kid will hate me because I gave him bad advice. So, I’ve been holding back.

Then two weeks ago on a Wednesday, I woke up with a twinge in my shoulder. ” I must have slept on it wrong”. By Friday at 6pm, I literally was not able to move my arm from my side. The doctor was worried it would “lock up”. I don’t know what that actually meant or how/if it could be fixed if it did. All the doctor said was, “if that happenings, it would not be good.” She looked concerned. Am I that fragile?! I didn’t even do anything except tap on my keyboard and click a mouse for 80 hours last week. How did this happen?!

How it happened is I’ve been working 14 hours a day for 12 years. Too driven to rest, too afraid to stop. To listen to my body — The same body which is also now 25 lbs. heavier than when I met my wife. I keep putting off today for the promise of tomorrow.

And ultimately for the last three years I’ve spend almost everything in my heart & soul on the firm I started. And here I am, 90% done with something that for better or worse has taken me three years to build; Over budget — late five (self-induced) deadlines ago. Probably at too much personal cost, too afraid to see what happens when I play my hand.

Too afraid to go All-In.

When I talk to my old friends who are still at the old Wall Street firm, they always say the same thing –“You had guts, you did it, you left the table. I could never do what you did”. And the truth is they could, some might. James Altucher did. Josh Brown did. And you could too. You could tackle your 10%. Some have a worse hand, others better. But the hardest part about making your next move isn’t laying down your cards — it’s accepting what’s on the other side of that bet.

So, after looking at everything — my life, my kids, my wife , my firm — the reality of it all. I’ve decided something: it’s time to start making some bigger bets. Lay down the other 10%. Lay down my fears. Life is a gamble. I’m not that 20-something who had something to prove when he walked in the room — he wanted to be seen. He wanted to make his mark. But that’s not me anymore. I don’t need to be seen, or even win. Now, I just want to play the game; my game. With everything I’ve got.

I’m All-In.

And read:

Backstage Wall Street

 

 

23 thoughts on “Life Is A Gamble, Are You All-In?

  1. bclund

    This is a great post..  I love how you mentioned that part in Josh’s book about “Merrill” and “Lynch” meeting at a YMCA.  For some reason I found that fascinating too.

    Nice job!

  2. Anonymous

    Nothing a shot of tordol and a week of pills couldn’t solve. Gotta love 21st century medicine.

  3. Anonymous

    You inspire Scott! To see the doubts about an industry and about life that run through my own head every day, down in words so eloquently, tells me it’s a worthy struggle.

    Thanks, good to see you back.

  4. Dksouthard

    Scott:

    Thank you so much for sharing your insights, reflections and feelings with all of us.  Brilliant. Really.  Everyone should read this.  You are a wise man for one so young.

    I’m not a market professional, just a stumbling amateur, but at 64, as a grandfather and just retired from 35 years in the criminal law business (also a high-macho enterprise with lots of risk and stress), I can totally relate.  I truly believe your have the wisdom and perspective to both succeed in this crazy business and as a father, a husband, and a human being.

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  6. reformedbroker

    I keep coming back to this, it’s really good scott and I appreciate the mention of course!

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  9. DC

     Great read. However from my own experience, a word of caution:

    I have been on Wall St all my professional life. I started doing well when I set my mind on consistency and baby steps. In doing so, I soon perfected the skills of making money by focusing on the nearest target and achieving it in the most efficient way. Looking back, the periods of time when I was fully focused on my baby steps amounted to a huge increase in net worth. Strangely, I never felt as if I was doing great, I felt content but never enthusiastic. Only in hindsight, at the end of a quarter or year, I went WOW when I saw my results and did order the most expensive bubbles at the club. I always knew I was doing good but didn’t even bother adding up the numbers, my focus was 100% the next baby step on the way up.

     And there were the other times, when I got tired of baby steps and thought, like you, ‘why not dream big’ … and looking back, these were the times when i got my arse kicked.  I only clawed my way back up when I went back to those baby steps.

    That’s just my story, and of course, there’s different strokes for different folks. I have been in the place you describe many times. Instead of taking flying lesson in a single engine cessna, I wanted the G6 on my private runway. Forget it. I found happiness and peace of mind focusing on what I am good at, and enjoying it to the fullest. Greed can be the spark that gets you going to new highs, but be very careful, once you succumb to greed you are playing with fire. And we all know, there is no such thing as mercy in our business.

    From what you write, you seem to be successful at what you do. Be happy and proud, adjust the pace at which you are moving forward, but never ever change what has worked so well for you.

    Best of luck!

  10. iheartWallSt

    We are tapping the same line of thinking. But there are moments in life when you need to reach outside of what is comfortable & this is mine. Granted with the wisdom you mentioned — not needing every toy and trapping of life — realizing what makes for a full life. 

    I appreciate the thoughtful comment, thanks for sharing & reading. Cheers, SB

  11. Horn

    People who think investing is somehow like ‘gambling,’ are destined to lose their clients’ money, and probably most of their own along the way.

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