The first week in November has been a roller-coaster ride. Up-down-up-down, pretty severely in each direction. The end net result was a small win for the week which is smaller than any one of my individual wins for the week (or losses, in absolute terms).
Considering some of the brutal stretches I had during the week, I guess I can't complain too much--I still won, right?--but it'd still be nice to receive a little more confirmation from the all-important bottom line that moving up in limits was the right choice. I mean, if I can't earn any more money playing 80/160 live and 30/60 oniline than I could playing 30/60 live and 15/30 online, why should I deal with the stress and higher variance? Admittedly, I still have a long way to go before I should even attempt to estimate what my profitability is at this level, but early returns point to a pretty similar earn-rate.
Which all (kind-of) leads into the main topic for this post: utility of money. I have a proposition:
Poker players have the smallest utility for each dollar earned of any profession.
Okay, perhaps that applies to all gamblers, but let's stick to poker since that's all I can semi-intelligently write about.
Let's compare someone who plays poker for a living to someone who holds a more "typical" job. I'll throw a nice round number out there for earnings. Let's say $100,000 a year. So perhaps this guy with the "typical" job is a lawyer.
The lawyer who makes $100,000 a year brings in a little over $8000/month. Since he works at an actual firm 40 (or, ahem, 80) hours a week, he gets his regular paycheck for the same amount every couple of weeks to do with as he pleases. He can save up for a downpayment on a house, one for a car, save up for retirement and budget for all the normal expenses based on that paycheck. There are no surprises; the paycheck will be there every week.
Assuming he doesn't totally screw up his work, he can expect to make that much money year in and year out, heck even get regular raises! Next year his income might be $108,000, and in five years maybe he's all the way up to $150,000. Because of this knowledge he has about his future earnings, once he does have enough money to make that downpayment on a house he can go right ahead and buy that house with its accompanying monthly mortgage payment of $2000-3000 a month. He can even lease that fancy BMW for $400-500 a month. Put away $W into retirment, $X into other long-term investments/savings, $Y into food/clothing/etc and $Z into entertainment, and there's his paycheck all chopped up and accounted for.
The poker player who makes $100,000 is in an entirely different financial world, however. First, what does it mean to be a poker player who makes a specific dollar amount per year? Is that how much he's made in the last year? Averaged for the last five years? What? A poker player can't tell you how much he expects to make in a given time frame any more than a trader can tell you how much he expects to make in the stock market.
All this is to say that even if the poker player made $100,000 in the last year, it certainly doesn't mean he'll make that much this year. It could be more, heck a lot more, but it could be less, yes, even a lot less. But let's assume he can maintain that pace. What does his $8000/month get him?
First, he has to maintain a bankroll, which should be quite large for someone whose goal is to earn six figures on the year, especially for limit players, and especially
for live players. So all that money that would be going towards that downpayment on a house or on a car is instead sitting around in various accounts (or casino chips) as the most basic tool of his trade.
The poker player will have dry runs. Sometimes for a week or two, but sometimes for much longer. I remember reading an article on Jennifer Harman where she said her longest losing streak was six months
. On the far other end of the poker-playing spectrum, I just had a losing month in September, my second since poker became my main source of income in June, 2004. I also had one essentially break-even month. What these examples show is that in addition to a bankroll, the poker player needs to maintain a healthy living-expenses account that he can withdraw from those weeks or months where he simply isn't getting a paycheck from his bankroll.
So he sure as heck can't budget for all the 8000 theoretical dollars he expects to make in any given month and simply chop it all up the same way our lawyer friend can. If the poker player lives that close to the wire, he'll simply guarntee himself of having to either delve into his bankroll, perhaps drawing it down perilously low, or having to withdraw from long-term savings and investments. Neither option is particularly attractive, as both sources are vital to one's wellbeing--one for current profitability and the other for eventually being able to, say, retire. I don't want to be grinding out my weekly meds bill at the 4/8 table when I'm 80.
And if the poker player wants to, say, get a raise, then he has to sock even more away into his bankroll so he can properly play the higher limits. And it isn't a linear growth--bigger limits bring with them better players and a smaller edge which means higher variance. If I want to increase my limits by 50%, I'd sure as heck want to increase my bankroll by at least 75%, or maybe even double it (note: if you're going from 4/8 to 6/12, this probably doesn't apply to you--a 50-60% increase should be sufficient).
The poker player also has more threats to his long-term prospects. As is common knowledge, poker is booming right now, perhaps bubbling. Like all crazes, it will die down, and with its wane in popularity will come tougher games and less profitability for everyone. The guy making $100,000 this year and $150,000 next year might be making $50,000 five years from now (or looking for one of those "typical" jobs).
Suffice to say, even if he does save enough above and beyond his bankroll to put in a nice downpayment on a house or car, he certainly shouldn't be locking himself into the same high payment that our lawyer friend can. Do you really want to be making monthly $3000 mortage payments when you're only pulling in $4000 a month in a few years? The end result is that the utility of the poker player's money is not only lower, but drastically lower. Perhaps by as much as 50% or more, although putting a number on it is like playing pin the tail on the donkey.
Personally, because of the all the future uncertainty inherent in poker, I feel the utility of the money I earn is nearly zero. I am a fairly cautious and frugal person as it is, in large part from how I was raised, so perhaps I'm more extreme than most, but I keep my monthly expenses to a (relative) bare minimum. I rent a one-bedroom apartment, drive a Sentra, spend almost nothing on clothing, eat as many comped meals as I can, and in general am watchful over just about every dollar I spend. I'm living just like I was when I was a graduate student living on a meager graduate student stipend.
I live this way in part because of my nature, but also because I don't feel like I can live like someone who earns much more than that. Yes I could drive a nicer car, live in a fancier place, have clothes that actually cost me money and eat at fancier restaurants, but with the large bankroll I feel I have to maintain respective to the limits I play and the completely uncertain future inherent in earning money from poker, I'm hoarding most of my earnings because I can never be sure--have I just been running well? Can I really make $X every single month? So the bottom line is that although I get added financial security, I'm really getting very little additional enjoyment out of my earnings.
Anyways, those were just a few thoughts for those aspiring pros.
And, as if this post weren't long enough, I think I'll end it by posting a hand. In my wild yo-yo-like ride of the past week, the hand that I found most debateable seems on the surface to be rather boring (no massive pots or huge bluffs here) but I felt that my play on every street but one is wide-open debateable. I certainly don't know the best way to play it.
My very first hand at the table. Live 80/160. I'm in the BB with KTo. I've watched the table for a few hands and I recognize a tough spot or two, but for the most part the lineup seems rather weak--too loose and rather passive, at least for an 80 game.
UTG+1 open raises, and the next two players both cold-call. It folds around to me. I call.
Flop (4 players, 8.5 SB): Q 9 7, rainbow. I check, UTG+1 bets, UTG+2 calls, MP calls, I call.
Turn (4 players, 6.25 BB): (Q 9 7) K, completing the rainbow. I check, it checks around.
River (4 players, 6.25 BB): (Q 9 7 K) Q. I check, it checks around.
See, what'd I say? Boring. But I think there's a little more to it than first meets the eye. And to be honest, it's decisions in more common hands like these that make the difference between winning and losing, not between folding, calling, or raising with a mediocre hand in 30BB pots.