Bubbly all round

I seem to have entered a kind of bubble mania in tournaments -- another reason never to play them for high stakes. Well, not real bubbles, but near as damnits. 9th out of 40 yesterday and 7th out of 40 today -- five places paid, of course. Financially, this is not very relevant (although a lack of cash in tournies does have an impact when it happens month after month), but the time taken is infuriating.

Worse, the Betfair players seem to have got better. Used to be you were in the cash after 90 minutes (level 9). Today we got to near the end of level 11 and there were still seven players left. I'd never managed to get above about 4,000 chips, had survived two called all-ins (with 64o and K8s, obviously), and hadn't seen a whisper of anything since level one, when the gods gave me quad eights and I milked my opponent for half his stack (rather well, I thought :-) ) In the end I got AQs in the small blind with 4900 chips and blinds of 400/800 with 100 antes. Limp from UTG and raise to 2400 from MP2. I bashed it all in and MP2 called. 11,000 pot and my AQs never had a chance against 55. Funny thing is, whenever I call with 55, I come up against 77.

I do better in the massive tournaments where I can focus and allocate the time. I'm sure that in 500-runner plus tournies I have a much better in the money-record than I do in these poxy five places paid games. The trouble is, the money added with 40 runners just about makes it worthwhile playing, at least if it's a matter of keeping your hand in.

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Taleeb rocks

When I first read Taleeb's "Fooled By Randomness" I did not give it the credit it deserved. I felt that we were looking at a player who made his money betting on unlikely events (in his case, taking cheap positions deeply out of the money and waiting for one in a 100 of them to pay off big time) but who did not really "get" the fact that this principle only worked provided only a few people were trying it.

Rereading his work, as I have been over the past few days, I have decided that I was unfair. Taleeb talks of "alternative histories". These, of course, are precisely what poker players are talking about when it comes to EV. If you make a play with a positive EV of $50, it doesn't matter whether you lose $600 or win $700 -- it was still the right play; even though that exact situation will never be repeated again. But in all the alternative universes, you are, in sum total, up.

But, as Taleeb says, try telling that to an accountant.

All this turned out to be serendipitous, because it appears that Man Financial is in a small bit of shit over Philadelphia Alternative Asset Management, a hedge fund set up last year which has comprehensively done its bollocks. Philadelphia was set up by Paul Eustace, a (wait for it) "star manager".

The details of the Man problem are fairly tedious (the old "secret accounts set up to conceal losses" tale - yawn), but the story of Paul Eustace is interesting.

Perhaps the investors in these funds really ought to go back and reread the opening chapters of Taleeb as well. Because here we have mention of just such a "star trader" (called "John"), who suffered the same fate as Paul Eustace. As the law of large numbers proves -- if you get 1m squirrels looking for nuts, and all of the squirrels are equally bright, then 100 of those squirrels will find a very large number of nuts, while another 100 will probably find none at all (and, on returning home, find that someone has set fire to their nut stash, making them down on the whole deal). If you choose to back the lucky 100, you might as well put all your money on red, "because that's the number that came up lst time".

What worries me is that some of these investors might have control of your pension.