Jan. 10th, 2008


Jan. 10th, 2008 01:07 pm
peterbirks: (Default)
I picked up a few bob on the recent decline in sterling vs the dollar. About three-cents-worth, which hardly bears mentioning. But it's interesting to note that the latest decline of 16 cents is not much less than the drop from $1.91 to $1.70 from December 2004 through to Q3 2005. It just doesn't seem so much of a decline beacuse the 2.1160 high was very much a "spike" that we only saw for a day or so -- too short for anyone to get used to it. The memory high is probably nearer $2.07.

My initial pullback thoughts when the 2.11 high vanished was "down to $1.95", although at the time this seemed horribly pessimistic/optimistic.

Today, with the suddenness of sterling's decline, it actually looks as if it could be an underestimate.

I always get it wrong in these situations. If I change my mind and revise the estimated drop lower, then sterling bounces, and if I don't revise my position, the fall continues.

However, in fundamental terms (only a small part of the equation), John Authers' comments this morning on the front page of the FT make sense. Sterling has been supported by high rates, but everything else makes it look like the dollar in exile. A massive account deficit, over-spending, and no logical reason to support it until purchasing power parity with the dollar is restored.

But (and Authers fails to address this point), all of these factors were either in place or were known about when the pound was leaping upwards through $2.00 on its way to $2.11. If sterling could go up then, it could go up now. Just because sterling "should" be cheaper, and just because we are in the middle of a sterling downswing, doesn't mean that reality has to carry on coinciding with theory.

And, despite how shit the pound is, let's face it, the dollar is worse, because the pound has one strength that the dollar hasn't; it isn't a reserve currency.

All this is, of course, music to the ears of people (such as, er, me) who have funds in dollars and euros, as well as in sterling. I actually tried my dollar Citibank card today (since I was paying in a Party Poker cheque). It failed at HSBC, but worked at Citibank (well, I should hope so). It shows the exchange rate you are being given (although I shall see if any commission charge is added to it when I get my statement) and then dispenses the money. That's a nice little reserve fund if I need it.


There is one piece of advice given to players moving up in stakes which I must warn you against. This is that, if you move up in stakes, you might consider keeping the same starting stack. I.E., if you start with a full stack at $200, you could keep the same stack when you first move up to $400.

Having dabbled with dual levels for a couple of weeks now, I can only say that this is a terrible idea. If you play "the same way" with a half stack as you do with a full stack, you will get slaughtered at one or the other levels. Players react very differently to you if you sit down with a half-stack, and you will find yourself committed to all-in plays far more often than the mathematics would appear to indicate than you are with a full stack. This is partly because players are far more willing to take you on. Pots are often impossible to get away from. In other words, playing a half-stack well requires you to change your style of play.

Far better to play with the same relative stack and to get used to the higher level with the game you are used to. Saying that you could switch to a half-stack when moving up in stakes isn't much better than saying "If you move up in stakes, choose a less volatile game like No Limit Omaha". Good half-stack strategy and good full-stack strategy seem to me to be that different from each other.

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