Memoirs of a Gambler - Poker

If you read the last Memoirs of a Gambler - Blackjack post, you'll know that my 2008 IRS Tax Rebate money, which I expect to receive soon, was spent in vain. As I once again vow never to spend money on such a fruitless endeavor, it reminded me of the many nights I use to spend playing poker. I associate poker with the lottery not because I've thought about quitting both countless times but because it is all about probability. Any good poker player knows that you never put your chips in the pot when the odds are not in your favor but when the lottery jackpot gets big like last week's $270 million dollar behemoth; one is lulled into a false sense of "pot odds". I'll discuss this in more detail later in the post.

Flashback - January 21, 2006 at the Tropicana Casino/Resort in Atlantic City, NJ

It is about 9 pm on a Saturday night and after eating at Seaside Cafe, I head over to the poker room (one of the only non-smoking havens in the casino) and cash in $200 at the cashier for some chips. After my initials were called, I was led to my seat at a $1/$2 No Limit Texas Hold' Em game. After settling in and making light banter with my neighbors, I begin to play.

After about 2 rounds of unplayable cards (at least for me), I finally get something I can play. I was dealt a JH TH (jack and ten of hearts) and sitting right behind the button I proceed to call the $5 pre-flop raise that already had 5 callers. At the flop, there was a total of 8 people who called (loose table) and the flop came 9S 2H 8H (Pot = $57). Nice, I had both a flush draw and an open ended straight draw and with a $10 bet it was a no-brainer call. Four people paid to see the turn which was the AH (Pot = $97). Sweet, I hit my flush although it was not the nuts (best possible hand). Second position bets $25, third position folds, I re-raise another $25 making it $50 total to protect my already made flush. First position folds and second position hesitantly calls. The river comes a KD (Pot = $172). Second position checks, I bet $30, he calls. I show the flush and he mucks. I can only assume that he has maybe two pair with the ace but who knows. He says "good hand" which is actually poker lingo for "You Bastard!" and I reply with the cordial "thanks". After raking in my chips, I tip the dealer $3 and begin to stack my chips.

After what seemed like an eternity of second class hole cards slowly eating away my stack (stack = $335), I finally received a gift from the poker gods. Pocket Rockets! Sweet! Struggling to maintain my poker face and sitting in third position, I raise pre-flop to make it $15 to play. Fourth position folds, fifth position calls, sixth position calls, seventh position re-raises it to $50 and everyone after folds with the raise coming back to me. I re-raise to $100, causing pretty much everyone else to fold besides me and the guy in the seventh position. He stares at me for a good minute and then goes all in making it another $210 to go. I think to myself - Nice, this is the situation I want, I have the best hand and I get to put all my chips in play, I call. We flip, he had Cowboys (Pocket Kings) and I turn over my aces. Flop turns 3D 7H 9H (Pot = $650), a bunch of rags and the flush draw wasn't an issue since we both had hearts. Turn comes JC - Nice, just one more bullet to dodge. As the dealer turns over the river card, a KS, my heart sinks, Cracked Aces, once again. The table exclaims in my sympathy as I looked in disbelief as what SHOULD have been mine was now being taken by someone else. I would feel victimized but I've experienced so many bad beats in poker than one almost feels that the rules of probability do not apply to this game. Needless to say, I quickly lost the remaining $25 on a few tilt-induced plays.

This is yet again another true story about my casino exploits. I don't really consider poker gambling because I am not playing against the house, where their games have a built-in edge, but rather against other players where the probability for winning is inherent in the cards you receive and also on the skill you possess. I would put poker in the same category as stock investing because success is usually achieved if you make the right decisions based on probabilities. The best players know when to stay in the hand and when to stay out of a hand.

When it comes down to poker or stock investing there are two elements, process and outcome. Process is the strategy that you apply and outcome is the result that occurs. Since poker is a game of probability, there are two outcomes for both the "right play" and the "wrong play". When the right play is made and the player wins, it is "the way it should be". When he loses, despite doing all the right things, it is a "bad beat". When a player makes a wrong play and wins, it is attributed to "dumb luck" and he's usually look down upon by the other better players. When the wrong play is made and the player loses, he gets what he deserves. Most people only focus on the outcome, "Who cares if you make the right play and go home broke, I'll rather make the wrong play and be a winner!", because the results are what really matters and are more tangible. In the long run this type of thinking is detrimental because one starts to attribute a good result as being synonymous to a good process. Since process ALWAYS trumps outcome, this type of thinking will cause you to eventually lose all your money because you have been mislead to think that the "wrong play" is the "right play" just because you won a hand using it. Probabilities always pan out in the long run. The same can be said about stock investing. Those who use unsound strategies to pick stocks become positively reinforced in their process when they make money but in the long run, they tend to lose more money than they make because they only chase performance instead of focusing on developing a sound strategy. Fund managers that do have a sound strategy (ie. Warren Buffet, George Soros, Peter Lynch) may have down months or years but their long term track record is unparalleled. Casinos are the same way, even though most casinos have only a 1-2% edge on all casino games, in the long term they always win.

With all games involving probabilities, there will be times that you will lose despite doing everything right. That is why you never put all your eggs in one basket for investing, gambling, day trading or anything else you do. Capital preservation is paramount when probability is involved because a 2% chance of failure can still happen and when it does, you want to able to play another day. When you only play the probabilities that are in your favor (making the right plays), it will always lead to superior outcomes it the long run. So if you want to win, don't focus on the results but rather on a sound strategy. Play like the house and play the "right way".

Now back to the issue of big jackpot lotteries giving a false sense of "pot odds". According to this website devoted to probabilities surrounding the Mega Millions lottery, the odds of winning are 1 out of 175,711,536. So it is common to assume that as long as the jackpot is above $175,711,536, it makes sense to play because the payout is higher than your probability of winning. But most big jackpots, after all the taxes that are deducted, are never above that probability and when you account for the increased chance of multiple winners for big jackpots (since a lot more people play), the probability doesn't even come close. Also, according to government statistics, there are about 1.3 deaths per 100 million vehicle miles (1 in 76,923,076). So if you drive half a mile to the store to buy the lottery ticket and drive half a mile back home, your chance of getting killed or killing someone else is 2.5x more likely than winning the Mega Millions Jackpot. For those who drive even further to buy tickets or those on motorcycles, I don't even want to do the calculations. In conclusion, according to probabilities, Mega Millions Jackpot lottery is a fool's bet (I'm sure the lottery winner from Georgia disagrees).

Truthfully speaking, I wouldn't be surprised if I end up spending more money on lottery tickets in the future because "hey, you never know".

Recommended Reading: Winning Decisions: Getting It Right the First Time by J. Edward Russo and Paul J. H. Schoemaker

Doomsday Vault?!!!!

While browsing the Yahoo front page I was captivated by one of the Yahoo top searches for today: Doomsday Seed Vault (How Diabolical!). Upon further investigation, I found out that it was OPENED today!! Pretty ominous sounding but luckily it was only opening for its inauguration and not because of the Armageddon.

The Doomsday Vault, which looks a lot like my PC tower left in the snow, is located in Svalbard, Norway and currently houses and protects 268,000 different seed samples against natural disasters and damage from wars. Although the vault is owned by Norway, countries are free to deposit their seeds while retaining ownership. The vault has the capacity to store 4.5 million different seed samples and seeds are stored in foil containers and placed in chambers cooled at -0.4 degrees Fahrenheit. The purpose of this vault is to provide back up and it will only be accessed when the original seed collections are wiped out.

For more information: visit www.seedvault.no

Now when you visit the Arctic Circle you can make two sightseeing stops, one to Superman's Fortress of Solitude and the other to the Doomsday Vault (both equally comic bookesque). But on a more serious note, this Doomsday Vault should raise awareness about protecting the world's seeds and also watching the global food supply. Let's hope we never have to hear about this vault opening ever again.

If you haven't already, check out my article - Corn Oil for the 21st Century - as it pertains to not only the energy crisis but the possibility of future food shortages.

Recommended Reading: None

Chemistry of Learning

Recently I was reviewing some chemistry concepts for an upcoming exam and I noticed an intriguing parallel between chemical reactions and the process of learning. As an avid learner, the observations discussed in this post have been prevalent throughout my learning experiences. For those of you who don't remember or who never learned any chemistry, here is a quick lesson on chemical reactions:

In order for a chemical reaction (initial state --> final state) to occur, there is an energy barrier that needs to be first overcome. This situation is much like pushing a boulder up from the east side of the hill to the west. Once the boulder reaches the apex of the hill, it will easily roll down to the west side. Although it is possible that someone is strong enough to throw the boulder over the apex of the hill, the most energy efficient way is to roll it from the bottom to the top. This minimum energy required to initiate the reaction is called the activation energy. As you can see from the diagram, usage of a catalyst can significantly lower activation energy.

From my experiences, in order for learning to occur, there is usually a barrier, similar to the activation energy of chemical reactions that needs to be overcome before any learning can take place. The point of learning is to go from an initial state (for example: non musician) to a final state (musician). Like the aforementioned analogy of pushing a boulder up a hill, unless you reach the apex, real productive learning can not occur. At the apex, effective learning begins and achieving the final state is not only a possibility but an inevitability. Failures to overcome this barrier are evident when you see people who put in good effort but are unable to reach their final states. I believe that anything can be learned, although mastery is another subject all together.

So, how does one overcome this learning barrier in the fastest most effective manner? This is very similar to asking what the fastest method is to pushing a boulder from one side of a hill to the other. One can either use more energy or somehow take a short cut through the actual hill itself. Here are some ways that can help you reach the activation energy needed to initiate effective learning:

1) Lower the Learning Barrier: In chemical reactions, the activation energy can be lowered by introducing a catalyst. Lowering the actual barrier will naturally cause the road to reaching the final state both smoother and faster. Common catalysts for learning are teachers/coaches, instructional books and the internet. These catalysts all act to lower the barrier to effective learning by providing a "shortcut" to reaching the top of "the hill". The quality of the catalyst is very important because poor and questionable instruction (especially on the internet) can prove to be detrimental to achieving your goals. Although it is possible to learn on your own, excellent instruction is usually the more effective method because good teachers have refined their methods from years of trial and error, saving you the trouble of hitting common pitfalls.

2) Use More Energy: Molecules with higher energy tend to react more easily because they overcome the activation energy more readily. Ways to increase energy in learning is to approach the process with a positive attitude coupled with hard work. Motivation, although helpful for the initial push and maybe short bursts during your learning process, is hard to sustain but having discipline will allow you to keep your energy high and at a consistent level. Without hard work and discipline, you will not have enough energy to reach the top of the hill.

3) Persistence: Molecules will constantly bump into each other until the right configuration and energy is achieved for a reaction. It is not enough to only have the energy to push the boulder up the hill; you need the resolve to keep pushing it until you reach the top. Even though mountain climbers cannot see the peak of a mountain until they get near the top, what keeps them going is that they know there is a peak. So for those who have tried but still can not see themselves as musicians, Italian speakers or golfers, just keep pushing to reach that apex and these things will become an eventuality.

From my own experience, here are some important points to keep in mind as you approach learning:

• As with different chemical reactants, different people have different activation energies. Some people may learn certain things faster and other things slower. Due to this natural discrepancy, it is pointless to compare yourself to someone else. Like all scientific experiments, there is a control and a variable. If you want to track your progress you should only make self to self comparisons to keep all other variables constant.
  

• One thing certain is that the more things you learn and the more times you successfully overcome the activation barrier, the easier learning new things will be. The brain is like a muscle that only gets stronger with exercise and use. Although the things you may be learning are completely unrelated, the actual process of learning these things are strikingly similar. For example, someone may be learning how to swim and after they overcome their learning barrier they will begin to be able to manipulate their arms and legs in the form of a swimmer. They may not have the best form yet but they are able to better consciously control and coordinate various aspects of their body, such as the arms, the legs and breathing. This boosted ability to control their body and breathing will strengthen the neural networks of their brain making it easier if they ever wanted to learn other things such as salsa dancing, martial arts, snowboarding, guitar and etc. Also, with each learning barrier conquered, you also build up your discipline and perseverance which will help you in everything you do. Bottom Line: Learn more things.
  

• Another useful method to help reach your desired learning goal is to map out mini goals. Succeeding at mini goals will provide the fuel you need to tackle bigger goals. For example, if you want to learn how to play the guitar, your first mini goal will be to play one chord, your next mini goal may be to play four chords and after that to play a song using the four chords you just learned. Before you know it, you will be playing the guitar and it was all because you were focused on reaching these small checkpoints and not on the taking the entire challenge as a whole. It is like running the marathon one mile at a time as opposed to thinking about running the entire twenty six miles.
  

• The most important attribute that will lead to successful learning is - Don't be scared to fail. People learn much more from failure than they do from success. Here are some good quotes summing up the subject of failure:

"You miss one hundred percent of the shots you never take"
(Wayne Gretzky)

"Success is going from failure to failure without losing enthusiasm"
(Winston Churchill)

"Life's real failure is when you do not realize how close you were to success when you gave up."
(Unknown)

Please feel free to comment with your own learning experiences and tips. Look for future posts concerning self-discipline.

Recommended Reading: Art of Learning by Josh Waitzkin

Memoirs of a Gambler - Blackjack

With the buzz of a $270 million dollar jackpot swirling in the air and suggestions to dream big and that I never know what could happen, I was moved to write about a topic near and dear to my heart, gambling. As I spend my expected 2008 IRS Tax Rebate money on lottery tickets, I am overcome by the familiar and uncontrollable urge to think about what I would do with the money I am about to win. Although such grandeur hopes have always been met with disappointment, I am sure this time it will be different. Why else would I play? Albert Einstein once defined insanity as "doing the same thing over and over again and expecting different results". Although I am not certifiably insane, I am stricken with a similar disorder of irrational thinking - gambler mentality.

Flashback - December 17, 2005 at the Tropicana Casino/Resort in Atlantic City, NJ

It is about 11 pm on a Saturday night and I sit at one of the few $15 minimum blackjack tables. I cash in $195 (high rolling, I know) figuring that I need to lose at least 13 (my lucky number) minimum bet hands in a row to lose all my money.

First hand, I play $15 and dealer shows an 8 and I have a king and a ten, I stand, he flips over his hole card, a 10, and I am straight (my stack=$210).

Second hand, another $15 bet to "feel" the shoe, dealer shows a 5 and I have 8 2, I naturally double down, next card a 4. After sarcastically commenting about my good luck, I stand, dealer shows a hole card 10 and proceeds to bust after drawing an 8 (my stack=$240).

Third hand, yet another skeptical $15 wager, dealer shows a 9 and deals me a blackjack. Maybe today was my lucky day (my stack=$262.50).

Fourth hand, I get aggressive, betting a whopping $22.50, dealer shows a 6 and I have 10 5. I stand hoping that the dealer will bust. Dealer turns over an 8, draws an ace then a king, 25, bust, the tables celebrates (my stack=$285). I think to myself, Sweet, it has only been bout 10 min and I already have a 50% return on my money, beat that stock market. The noise at our table and the general look of content on our faces was more than enough to attract a few people looking to get in on the action.

Fifth hand, 4 for 4 so far, I'm hot, so I place $25 in the betting circle and before the dealer gets the chance to deal, a young woman (lets call her Jane) flanked by two of her giggling cohorts cashes in $40. She bets $15, I am still at $25 and the dealer shows a 6 and I have 3 8 so I eagerly double down, a 6, hmmm... 17, no worries, he'll bust. Jane is dealt a 9 4 and to my horror and the horror of the other players, she hits, dealer hesitantly turns her over an 8. Jane and her friends cheer while the rest of the table watches anxiously as the dealer turns his hole card over revealing a 10. As the dealer pulls out the next card from the shoe, the mounting suspense is dissipated by swears and groans as the dealer apologetically reveals a 4, 20, @#%!. Jane and company celebrate oblivious to the scathing stares from me and the other victims on the table (my stack=$235, Jane's stack=$55). This stupid girl doesn't know how to play, damn newbies, always making me lose money, I should stand up.

I put $25 in the betting circle and Jane plays $20, sixth hand. Dealer shows a jack and I have 10 5 so I hit and receive a 3. Jane has queen 4 and after much deliberation with her friends, stands. Dealers turns over a queen (my stack=$210, Jane's stack=$35).

Seventh hand, I play $15 with the rationale that a loss will only bring me back to square one, Jane bets $20. Dealer shows a 9, I have 10 7 and Jane has 10 8. Dealer turns over a queen (my stack=$195, Jane's stack= $15). Man, three in a row already and I've lost all my winnings, I should really get up from this table.

I place $15 in the betting circle; Jane plays the last of her chips. Eighth hand, dealer shows an Ace, I have 9 5 and Jane has 10 2. Thinking that a 14 was not worth insuring, I decline the dealer's offer. Jane also declines although I don't think she really understood what was happening. After sweeping his hand over the cards to reconfirm that no one took insurance, the dealer turns over a 10. The table boos while Jane's corner whimpers at their misfortune (my stack=$180, Jane's stack=0). I should really get up, this dealer is killing me. Jane then stands up and leaves the table with her friends. My heart rejoices and with a renewed optimism, I wager $20.

Ninth hand, dealer shows a 5 and I have 8 8 so I put up $20 to split them. For the first 8, I'm dealt a 2 so I put up another $20 wager to double down, a 9. For the second 8, the dealer gives me a third 8. Recounting to the dealer and my fellow players about how I have fantasies about a set up like this one, I split again. For the second 8 a 7 and for the third 8, a 3. "Wow, I guess I have to do it" I said to the dealer and put up yet another $20. Now with a total of $100 on the table, my palms moisten as the dealer turns over his hole card, a 6. All is lost, I thought to myself. The dealer reaches for and turns over his next card, a 3. "Yes!" I exclaimed and standing up from my seat and in a mock Chinese accent I call for the almighty "Monkey!" (casino slang for 10) to come out. The dealer slides the next card from the shoe and I try to synchronize a table slap with the dealer's turn of the card. As I vehemently slapped the table, the dealer turned over a 7. Doing the math twice to make sure it was really 21, I slumped back into my chair and watched helplessly as the dealer struggle to clean up the mess of cards and chips in from of me (my stack=$80). Damn me, I should have gotten up when I was flat. I'm already down $115, I can't stop now. Either I get back to flat or I lose it all.

Tenth Hand, I bet $30 since I can't imagine seeing myself making a comeback $15 at a time. Dealer shows a jack, I have 10 3, I hit, a 9, bust (my stack=$50)

"Lets not waste anymore time. I am my father's son and I am here to gamble" and with such declaration, I go all in, $50. Dealer shows a 9, I have 10 4. I hit, a queen, bust (my stack=0, my mood=horrible). What a bad way to go, the dealer didn't even get a chance to bust. I knew I should have gotten up when I was winning.

This particular turn of events is 90% true. The only discrepancy is my poor memory of the actual cards that came out for each hand. This night was memorable not only because it happened so quickly but because a bulk of my casino visits have been very similar to this one. Although the dollar amounts and number of hands played maybe different, the scenarios presented in this flashback occur all the time. This story also contains many examples of the gambling mentality. To understand gambling mentality it is necessary to know:

Why do people gamble?

• The allure of "easy" money is addicting - If you make $100 a day doing hard manual labor, and if you can win $100 in 10 minutes by playing cards, which would you prefer.
  

• To obtain immense wealth unobtainable through hard work - A dollar and a dream, that's all you need. No matter how hard some people work, they will never make $270 million. At casinos, any lucky streak in any casino game will make you tons of money.
  

• The excitement of putting something on the line - Thrill seekers can get a rush from knowing they can lose it all. Adrenaline and Serotonin can come into play.
  

• It's a behavioral psychology thing - The best way to motivate people to perform a certain activity is to give them rewards only some of the time. If people are constantly rewarded, they would get bored of the activity and the effectiveness of the reward will also decline.
  

• It isn't gambling at all - Some people play games that have a skill aspect in addition to the chance aspect such as poker. Card counters, who swing the win percentages slightly in their favor for blackjack by accounting for the history of cards, is another example for skill coming into play. Most of these people are professional gamblers because they possess an edge that can provide them with sustainable consistent income in these "chance" games.
  

What is the Gambling Mentality?

• Attributing Meaning to Things that Don't Have Meaning - Gamblers have a tendency to imbue meaning on things that are otherwise meaningless and this manifests itself in superstitions and signs. Unlucky dealers, elaborate routines, and unwashed lucky socks are all part of the gambling mentality. Gamblers tend to often mistake correlation for causation.
  

• Feelings of Control - Gamblers see chance games as something they can control. The more they play the better they get at it. There is a sense of skill mastery. You can see why with this mentality, gambling can get so addicting. How many people do you know that are "experts" at gambling or have a "winning strategy" to beat the house? Gamblers feel that as long as they play the "right way", they will win money.
  

• Skewed Views - Gamblers have a skewed perspective on outcomes relating to chance events. While a regular person might view a losing streak as a string of losses, a gambler might see the same losing streak as a string of near misses with each loss bringing him/her closer to a win. In most casino games, the probability to win for each wager is the same for every other wager. Just because red comes up on the roulette table, the chance for it to land on red or black on the next roll is still the same as for the previous roll. So just because one loses 8 times in a row, it does not make it any less or more likely that one will win on the next roll. When it comes to games of chance, the probability of the future outcome for the most part is independent of the historical outcome.

From some of the observations mentioned about reasons for gambling and gambling mentality, it is no wonder why casinos can look like palaces and still give complimentary room, meals and awesome amenities. Casinos stay in business not because of beginning gamblers that don't know basic strategy but because of the veteran expert gamblers who roll their eyes and make a fuss when their gambling flow is ruined by people who "don't know how to play". Most people lose when they go against the house but because they feel with every loss they are one step closer to winning, they persist so they can one day get that big payout. If they ever do get that big pay out, they will probably be more entrenched in this vicious cycle because now they've received some positive reinforcement from all their efforts.

I won't lie, I like to gamble and I can't say whether gambling is good or bad but I can say compulsive gambling is bad. Know your limits and if you can no longer control your own actions, it is time to get some help from groups such as Gamblers Anonymous or 1-800-GAMBLER.

Feel free to give accounts of your own gambling exploits or share your thoughts about this and other posts by leaving comments.

Stay tuned for more recollections in the Memoirs of a Gambler series.

Recommended Reading: Busting Vegas by Ben Mezrich

Corn Oil for the 21st Century

Anyone that has recently been to the supermarket or bought lunch at a local deli can attest to the fact that prices for food have been rising, seemingly faster and more so than other goods. There are a plethora of reasons behind this rise. First of which is the upsurge in demand for meat from the increasingly affluent middle class of China and India stemming from recent booms in their economies. According to an article from The Economist, "it takes three kilograms of cereals (grain) to produce a kilo of pork, eight for a kilo of beef". So if you do the math, more meat consumption = a lot more grain consumption. A second factor for this "agflation" is crop failures due to natural calamities, droughts (Australia) and cold, rainy weather during the growing season, and political upheavals in emerging countries (Kenya). Although these two factors have had significant impact on the price for food, the dominant cause for this current rise is OIL. Oil's influences on food prices have been unproportionately two-fold. The obvious reason albeit the lesser influence is the increase in transportation and production costs due to record high gasoline and oil prices (crude oil closed at $100/barrel today). If it costs the producer more to process and package the eggs and to ship them to your local supermarket, naturally, some if not all of this expanded cost will be passed to you, the consumer. Finally, the second and foremost reason for such lofty food prices is the use of food as a direct substitute for oil.

"Food as Fuel", a phrase when used 5 years ago would have unmistakably meant fuel for the human body with prompt reference to the iconic food pyramid, has taken on a whole new meaning in 2008. Common feedstock such as corn (maize), sugar cane and switch grass can be converted to biofuel, specifically ethanol, using fairly simple chemical processes (sugar fermentation, distillation, dehydration and denaturing). The apparent appeal of biofuels (reduction of greenhouse gas emissions and a solution to our "addiction" to fossil fuels), numerous government subsidies and farmers exclusively planting biofuel crops because of lucrative economic incentives (oil at $100/barrel) have greatly accelerated the decrease in world food supply.

I am not here to discuss the already controversial and much debated "Food vs. Fuel" argument because a simple Google search will show that there are a ton of articles and forum discussions written by people far more qualified on the subject matter. Rather I would like to talk about ways we can reduce the price of both of these scarce resources: food and fuel. When dealing with scarce goods, prices are governed by the law of supply and demand. In order to decrease prices, one must increase supply and/or curb demand. Since most of us do not own a farm or an oil field, lower prices can only be achieved by reducing consumption of food and fuel thus decreasing demand. Fuel saving tips abound throughout the web and instead of reiterating what has already been covered, I have decided to link a post from a fairly comprehensive fuel economy website and divert the rest of this post to reducing food consumption. Since food is now a direct substitute for fossil fuels, reduction of food consumption should impact both the price of food and fuels. Here are some good ways to reduce the amount of food you eat:

• Reduce Calories, Increase Nutrition - Eat foods with high nutritional content (low saturated fat and high in dietary fiber, vitamins and minerals) and take multivitamins to supplement nutritional deficiencies. Vegetables, fruits and whole grains have good nutrition with low calories while foods high in both sugar and fat provide calories but are usually low in vitamins, minerals and fibers. Make it a habit to check the nutritional food labels of the food you buy. Here are two interesting links: Foods with the Highest and Least Nutrition Content and Nutrient Search Tool

• Do Not Waste Food - This is something you've probably heard all throughout your life. Whether it was from your mom, from your teacher or from TV, I am sure most of you never took it seriously, I know I didn't. Well, if you want gasoline, milk and bread prices to go down, Don't Waste Food! Don't overeat, save leftovers for later and do not be afraid to doggy bag from eating out. Buy, Cook, and Order food in moderation. You know how much you can eat, don't let your cravings and hunger dictate your ordering or food shopping.

• Eat Less Meat - Remember: more meat consumption = a lot more grain consumption. If you can, eat less meat, especially beef and pork.

Like a car with high gas mileage, these suggestions will allow you to eat and operate more efficiently. Reducing food consumption will naturally lead to a healthier diet since nutritional foods will be preferred over unhealthy ones. Better health will bring longevity and energy. Saving Money, More Energy and Longer Life, it is truly a real life trifecta.

As the intertwining of food and fuel become increasingly twisted with record high prices in both commodities, Corn Oil will have a whole new meaning by the time we reach 2009.

Recommended Reading: Beyond Oil: The Threat to Food and Fuel in the Coming Decades by John Gever

Dangerous Seven

Recently, I stumbled upon some teachings by Mohandas Karamchand "Mahatma" Gandhi, the father of India and pioneer of Satyagraha (सत्याग्रह, a philosophy and practice of active, non-violent resistance). Unlike Machiavellian thought of "ends justifying the means", Satyagraha teaches that the means and ends are inseparable and that it is contradictory to use unjust means to obtain justice or use violence to obtain peace (not a popular belief even in this day and age). Gandhi believed that although violence is preferred over cowardice, "nonviolence is infinitely superior to violence, forgiveness is more manly than punishment".

Out of his many wisdoms, Mahatma Gandhi's observations on Traits Most Spiritually Perilous to Humanity resonates most strongly with me:

Wealth without work.
Pleasure without conscience.
Science without humanity.
Knowledge without character.
Politics without principle.
Commerce without morality.
Worship without sacrifice.

These seven traits if you stop to consider are still very prevalent throughout our society and amongst our political and corporate leaders. I am sure the readers of this post all have different belief systems but these seven traits are worth noting regardless of where your moral loyalties stand.

Recommended Reading: Gandhi: a Life by Yogesh Chadha

Yin Yang Markets

Happy Lunar New Year to All! In the spirit of the year of the Earth Rat, I will be briefly touching on some Chinese philosophy in this post. yin (陰) and YANG (陽), two of the most famous yet widely misunderstood concepts in the world. yin and YANG are opposing yet complementary forces found in all universal processes. The way the world works according to this philosophy has been summed up in one symbol, the Taijitu (太極圖, picture on the right). While most pictures are worth a thousand words, this one defines the natural order of the universe.

Here are some basic interpretations of the Taijitu:

• White represents YANG and Black represents yin


• YANG and yin are never separated and one cannot exist without the other - "yang in yin and yin in yang"


• There is a sense of perpetual motion between yin and YANG where equilibrium is never reached.

Day turning into night and night turning into day is a good visualization of the taijitu. Right when night (yin) reaches its darkest point it begins to grow into the light of day (YANG) and when the daylight is at its brightest, the sky already begins to darken.

If Chinese philosophy had to be summed up in one word, it would be BALANCE. Too much or too little of anything is bad. Interestingly, when thinking about balance, one cannot help but to conjure up circular images and words (well rounded, all-around, the geometrical circle). Circles have no beginning or end. Things tend to flow smoothly along curved edges and circular paths have been the foundation of many martial arts, dance techniques and architecture.

Chinese philosophy can be seen in a plethora of real world stages. One of particular intrigue and striking semblance is the financial stock market. In the stock market, there are two key fundamental forces that drives stock movement, buying and selling. These two forces are both opposite yet complementary (sound familiar?). When someone is buying, simultaneously someone else must be selling. Without either force the entire stock market would cease to exist (sound familiar yet?). Just as with yin and YANG and night and day, the natural order when a trend is at an extreme is for it to reverse. So at times of euphoric buying where it seems like everyone is a buyer, most likely the trend has already reverse and the panic selling is soon to begin. On the same note, if everyone is selling and things just get extremely bearish, the buying has probably already begun. This happens all the time and yet only a small handful of investors capitalize on this each year. The reason for this disparity is not that the other multitude of investors do not understand or know about this widely publicized trading adage but rather:

1. Emotions - At these extreme points, your emotions will be telling you to do the exact opposite of what you SHOULD do. When the market is dying, fear tells you that the entire financial system as you know it is about to collapse and that companies will go bankrupt. That is enough to stop even the most staunch investors from pushing the buy button. Reversely, when the market is flying, euphoria tells you that the sky is the limit and that bubbles and subsequent crashes were a thing of the past. How can anyone sell their long positions when "it's different this time around" and when you're sure to miss the "greatest bull market of all time".
2. Buying at 9:00 PM and/or Selling at 7:00 AM - Continuing with the night and day analogy, lets introduce the clock which will represent stock price movements with the peak being the brightest time of the day and the trough being the darkest time of the night. Many investors simply have bad timing. What usually happens is that these investors will buy at 9:00PM because it has been dark since 6:00PM but they don't realize that they have a long way to go before dawn so as their losses mount, they have no choice but to capitulate to preserve capital. Sometimes an investor will buy at a good time maybe at around 6:00AM and fearing that he will lose his profits, decides to sell at 7:00AM. Even though technically he has made a profit, it is usually not enough to offset his other losing trades and commission costs. Since there really isn't a clock for the stock market. investors can't be fully blamed for their mistiming because without a clock or watch, you would probably be late or early for many events.
3. Too Good to be True - Many investors don't even bother looking into these types of trades because "it can't be that easy or else everyone would be rich". Everyone knows from economics 101 and common sense that "there ain't no such thing as a free lunch" (tanstaafl - look it up, its really the acronym) so why get into a trade that seems too good to be true. First of all, from the first two reasons alone, being able to execute this seemingly easy trade is actually pretty difficult. Secondly, this "ain't no free lunch" because all the people who are dominated by their emotions (see first reason) will be billed for however big a lunch you decide to take at their expense.

There are other reasons why this trade is not more lucrative for the masses, but I will not detail them here now. I can personally attest to falling victim to all these reasons during my investing career. In my opinion, too many investors focus too much energy on finding a winning strategy, formula, indicator and/or guru (Jim Cramer? Warren Buffett?) that they neglect looking and tending to their own weaknesses in discipline and emotional awareness and control. It is like a basketball team with an awesome playbook and coach but players who cannot shoot, pass or dribble. Without execution, there are no results.

Disclaimer: I am not an advocate for Chinese philosophy over other schools of thought but merely giving credit to those who predated me in my observations of how the world works. I am not here to tell you how to live your life or how to invest in the stock market. This post have barely even touched the surfaces of both Chinese philosophy and Stock Market Investing and everything is of course my own musings, insights and speculations. There are plenty of books and experts out there on these topics so like my man LeVar Burton use to say on Reading Rainbow, "But you don't have to take my word for it".

Recommended Reading on this Topic: Tao Te Ching, Reminiscences of a Stock Operator by Edwin Lefevre

Seemingly Useless?

Two words usually reserved for describing the human appendix has become the rallying cry for this humble blog. To some the contents of this blog may indeed seem useless and random but for those who use creativity as defined by William Plomer, “the power to perceive and connect the seemingly unconnected”, there might exist some interesting and perhaps useful tidbits.

“Experience has shown, and a true philosophy will always show, that a vast, perhaps the larger portion of the truth arises from the seemingly irrelevant“ -Edgar Allan Poe

There are a few things to keep in mind when reading this blog:

1) Random posts may not be that random.

2) I hope that the comments will be as interesting if not more so than the posts.

3) Your guess is as good as mine.

Have fun!