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Markets schmarkets
Aug. 13th, 2009 01:37 pmWell, anyone who has been short on the stockmarket this year is looking a bit stupid. I'll admit to having lost a couple of hundred quid in the past month myself -- mainly because the current rise to the mid 4700s defies rational explanation. Just because pundits explain "why" something has happened, that doesn't mean what they are saying makes any sense. The simple fact of the matter is that gazundles of bad news has been shrugged off as if it isn't there.
The only conclusion that I can come to is that it's all China's fault. They've spent this year pumping dosh into the Chinese economy. Net result, a soaring Shanghai stockmarket. Further net result, much happier bods throughout the world than would otherwise be the case.
But what is the lag on this? Because the Chinese reduced the flow last month. They were worried that things were getting out of hand. And is my analysis right anyway? Is there really some other "dark matter" factor holding the UK equity market at what strike me as unfathomably high levels?
And it's the cyclicals that have moved up quickly, not the defensives. Now, excuse me if I'm stupid, but, here we are, smack in the middle of a recession where unemployment is zooming up and everyone is reining in, and cyclicals are going up while defensives go down? It's economics, Jim, but not as we know it.
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You play so many hands online that it's hard to get situations where you say "well, THAT was unusual".
So, here's the back story. A few years ago at maonrcon I remember a hand between Sharples and Beattie, where the flop came AAA. Beattie went all in with KK and Sharples won the hand with AK.
Yesterday I was under the gun in a $2-$4 game and got KK. I raised to $12. Button cold-calls (a common occurrence at this level btw) and Big blind raises to $60. I reraise to $150 and Button folds. Big blind calls. $310 in the pot and we both have $250 behind.
Flop comes, yes, AAA.
Big blind checks. Now, what's his range here? AK fits the story, as does QQ, JJ and KK. There's not really much else in the game, TBH.
The hand went check, check, check, check, check, check, and we both turned over KK.
On the river I was very very close to betting, but it's hard to describe how sick you feel if you bet $250 and then lose when you were last to act. But I think that I should bet there, if only because 95% of players if they had the Ace would bet the river in this situation. In fact, at $200 buy in I probably would have bet. It's a case of the stakes being a bit scary for me. But, well, that's understandable. They take time getting used to.
If I do bet, what amount should I bet to maximise return? That's a tough one to get right. I suspect that a half-pot bet generates a call from QQ whereas a full-pot bet has the plus of possibly generating a fold from the hand that opponent actually had - KK. But opponent is going to have QQ six times as many times as he has KK (perhaps a fraction less, because some players fold QQ to a four-bet preflop)
So, let's assume that the distribution is AK (x2) KK (x1) QQ (x6) JJ (x6).
However, we know that if he had AK he would nearly always bet (say, 95% of the time). That reduces the chance of AK to x0.1
Moving that over to percentages we get 46% JJ, 46% QQ, 7% KK and 1% AK.
Let's assume further that JJ always folds to an all-in bet, QQ folds 75% of the time, and that KK folds 50% of the time. AK, of course, slow rolls you.
You gain nothing from the JJ bet, $28.75 from the QQ bet, $5.42 from the KK bet and lose $2.50 from the AK bet. That gives you an average gain of $31 on the hand from betting. Of course, if QQ always folds, the gain shrinks to $3. If KK never folds, your gain shrinks to negative territory. But anyone who comes up with absolutes in this game is making a mistake. Indeed, I've made a mistake by not extending opponent's range according to a "mad factor".
So, my estimate is that I gave up $35 or thereabouts by being too much of a chicken to bet that river. Given opponent's hand, my failure to bet costs me far more -- $155.
For half-stack bets ($125), JJ might call half the time, QQ might call 75% of the time. KK will always call and AK will raise you all-in, which you could actually fold against a specific type of player, but in reality you sigh and call.
That gains you $28 from JJ, $42 from QQ, $0 from KK and loses $2.50 from AK. Seems to be a net gain of $72 per hand, although in this particular instance it is the worse option.
My numbers might be totally fucked up here, as Im doing it in my head, but they re supported by my gut instinct, that a half-pot bet will pay off more.
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The only conclusion that I can come to is that it's all China's fault. They've spent this year pumping dosh into the Chinese economy. Net result, a soaring Shanghai stockmarket. Further net result, much happier bods throughout the world than would otherwise be the case.
But what is the lag on this? Because the Chinese reduced the flow last month. They were worried that things were getting out of hand. And is my analysis right anyway? Is there really some other "dark matter" factor holding the UK equity market at what strike me as unfathomably high levels?
And it's the cyclicals that have moved up quickly, not the defensives. Now, excuse me if I'm stupid, but, here we are, smack in the middle of a recession where unemployment is zooming up and everyone is reining in, and cyclicals are going up while defensives go down? It's economics, Jim, but not as we know it.
+++++++
You play so many hands online that it's hard to get situations where you say "well, THAT was unusual".
So, here's the back story. A few years ago at maonrcon I remember a hand between Sharples and Beattie, where the flop came AAA. Beattie went all in with KK and Sharples won the hand with AK.
Yesterday I was under the gun in a $2-$4 game and got KK. I raised to $12. Button cold-calls (a common occurrence at this level btw) and Big blind raises to $60. I reraise to $150 and Button folds. Big blind calls. $310 in the pot and we both have $250 behind.
Flop comes, yes, AAA.
Big blind checks. Now, what's his range here? AK fits the story, as does QQ, JJ and KK. There's not really much else in the game, TBH.
The hand went check, check, check, check, check, check, and we both turned over KK.
On the river I was very very close to betting, but it's hard to describe how sick you feel if you bet $250 and then lose when you were last to act. But I think that I should bet there, if only because 95% of players if they had the Ace would bet the river in this situation. In fact, at $200 buy in I probably would have bet. It's a case of the stakes being a bit scary for me. But, well, that's understandable. They take time getting used to.
If I do bet, what amount should I bet to maximise return? That's a tough one to get right. I suspect that a half-pot bet generates a call from QQ whereas a full-pot bet has the plus of possibly generating a fold from the hand that opponent actually had - KK. But opponent is going to have QQ six times as many times as he has KK (perhaps a fraction less, because some players fold QQ to a four-bet preflop)
So, let's assume that the distribution is AK (x2) KK (x1) QQ (x6) JJ (x6).
However, we know that if he had AK he would nearly always bet (say, 95% of the time). That reduces the chance of AK to x0.1
Moving that over to percentages we get 46% JJ, 46% QQ, 7% KK and 1% AK.
Let's assume further that JJ always folds to an all-in bet, QQ folds 75% of the time, and that KK folds 50% of the time. AK, of course, slow rolls you.
You gain nothing from the JJ bet, $28.75 from the QQ bet, $5.42 from the KK bet and lose $2.50 from the AK bet. That gives you an average gain of $31 on the hand from betting. Of course, if QQ always folds, the gain shrinks to $3. If KK never folds, your gain shrinks to negative territory. But anyone who comes up with absolutes in this game is making a mistake. Indeed, I've made a mistake by not extending opponent's range according to a "mad factor".
So, my estimate is that I gave up $35 or thereabouts by being too much of a chicken to bet that river. Given opponent's hand, my failure to bet costs me far more -- $155.
For half-stack bets ($125), JJ might call half the time, QQ might call 75% of the time. KK will always call and AK will raise you all-in, which you could actually fold against a specific type of player, but in reality you sigh and call.
That gains you $28 from JJ, $42 from QQ, $0 from KK and loses $2.50 from AK. Seems to be a net gain of $72 per hand, although in this particular instance it is the worse option.
My numbers might be totally fucked up here, as Im doing it in my head, but they re supported by my gut instinct, that a half-pot bet will pay off more.
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