Hedging

Might still have another post or two left to file under the “poker’s precursors” heading -- at the very least I’m going to do an epilogue recapping those games and adding a few other thoughts regarding them. Today, though, I’ll just pass along this short poker-related item from National Public Radio, a segment appearing earlier today called “Hedging Their Bets: How The Pros Diversity Their Poker Portfolios.”

Clicking the above link gets you to the short audio clip as well as a transcript of the report. Basically it’s just sharing to a non-poker audience the phenomenon of players buying pieces of each other in tournaments, presenting it as an alternative way to “invest” besides simply paying one’s own entry fees and trying to eek out a profit.

Poker pro Derek Wolters is featured as the investor, describing in particular his having played and busted the 2012 World Series of Poker Main Event while also buying pieces of 16 other players in the tournament. One of those Wolters bought pieces of turned out to be Jake Balsiger who went onto finish third for a nearly $3.8 million prize -- good for almost $600,000 for Wolters.

“Are you a better investor or a poker player?” asks reporter Keith Romer of Wolters near the end, who replies he thinks he’s better at investing while adding “there’s not that many people who do as much investing as me.”

The piece does a nice job presenting the phenomenon of buying action, with the analogy of this being a way to “diversify” a “poker portfolio” helping get the idea across. The piece might give the impression that tournament players selling/buying action is somewhat new, when obviously it isn’t.

It also perhaps suggests misleadingly that buying pieces of others is a better investment strategy than playing oneself, with the bonanza Wolters happened to hit with Balsiger making it seem he exerted some kind of skill or strategy with his investments that was better constructed than the strategy he employs at the poker tables. That could well be true, but in just over three minutes there wasn’t a lot of space to give his two methods of investing a thoughtful comparison.

Finally, I can’t help but think how at least a few non-poker playing listeners might wonder a little about the ethics of players buying and selling each other’s action while also competing against each other in the same event. It’s an issue -- usually a non-issue -- with which those of us close to that world are very familiar, but from the outside it has to seem a little strange. That is, buying percentages of others whose success or failure is not unrelated to your own, not to mention the more direct possibility of collusion that always exists as a possibility when players who’ve bought pieces of each other happen to meet at the same table.

Describing the practice as “hedging” fits in one sense -- by buying up pieces of others, players do give themselves extra chances to win should they themselves lose. But are they “limiting their exposure” (as hedging is normally described) or increasing it? Just as poker is a more complicated game than it might appear from the outside, so, too, is buying action a more complicated investment strategy than the piece perhaps lets on.

I liked the piece, but then again I’m not sure. I want to hedge.

Image: $100 bills in $10000 straps, stacked in a pyramid, public domain.