Hi,
I subscribe to the Casey Daily Dispatch with is supplied by Casey Research. Following is a blurb from today's issue which is a tremendous analogy and right on target if you ask me.
regards,
5412
Play the Man, Not the Hand
My initial reaction to Gary K. was mild irritation. In no small part because our Crisis & Opportunity Summit had just ended and I was tired. Yet, there I sat, playing poker in a Vegas casino across from Doug and Marin at 2:30 am in my native Eastern Time.
Gary K., who hailed from Brooklyn, sat to my immediate right, shepherding a large pile of chips. While some players sit stone-faced, with nary an emotion in evidence, Gary was an eager talker whose steady patter, initially, irked me.
"Want to bet me blind?" he asked me repeatedly. "You don't look at your cards, and I won't look at mine! C'mon, it will be fun!"
"What, that's all you got?"
"The guy on the other end of the table has an ace, but nothing else. Hey, you - you got an ace? Yeah, you got an ace! C'mon, admit it."
"That's right, go ahead and put some more money in the pot so I can smack you down!"
As I said, my initial reaction was irritation, but after watching him play for a while, I realized the pile of chips in front of him wasn't thanks to the vagaries of Madame Luck. Gary K. might like to talk, but there was definitely method in his maddening ways, and I warmed up to him.
Especially after someone else at the table, also aggravated by his tableside manners, suggested Gary K. needed to relax - maybe by engaging in some of the loose sex that is said to "stay in Vegas." To which Gary K. responded earnestly, "No sex for me tonight, not with the Missus home in bed in Brooklyn!"
In any event, I started to enjoy his company and was particularly happy to sit on his immediate left as that allowed me to bet - or not - in response to his aggressive style. Simply, when it came time to bet, as often as not, Gary K. was unhesitant in shoving a huge stack of chips on the table - forcing everyone who had bet up to that point to either put up, a lot, or fold. From my vantage point, as the player who followed Gary K. in turn, I had the distinct luxury of folding without suffering great financial harm if I didn't have a particularly strong hand.
"Push 'em out of their comfort zone, and then bulldoze 'em," he muttered to his new student, me, on more than one occasion as he shoved in a big pile.
Poor Doug and Marin, seated as they were just before Gary K., never had a chance, as he pushed large bet after large bet at them, in time cleaning them both out.
As I am only a casual poker player and it was now a lifetime past my bedtime, I began to grow weary of the game - which is to say, get sloppy.
It was about that time that I ended up in a particularly aggressive exchange of bets with a quiet man at the far end of the table. Gary K. had dropped out of the hand in the first round of bets and initially watched quietly as I pushed pile of chips after pile of chips onto the green felt.
"What are you doing?" he asked in an incredulous whisper.
"Betting, what does it look like?" I replied.
"Are you crazy?" he said, agitated. "Haven't you learned anything I've tried to teach you?"
"What?" I whispered. "I have a strong hand, why shouldn't I bet."
"Arrgh," he grunted as he watched me shove another stack onto the table. "You putz, you always play the man, not the hand!"
Definitely discomfited at the size of the stakes now in play, I tried to ignore his pained groans as the stakes went up and the time came to show our respective cards.
I forget the exact combination of our cards, but watched unhappily as all but a smattering of my chips were swept off to the far end of the table.
"What were you thinking?" Gary K. said again, his disappointment at my feeble effort palpable.
"What?" I said defensively. "But how'd you know I'd lose?"
"Like I said, play the man, not the hand. And the man you were betting against is the tightest player at the table. All night long he has never, ever, bet unless he's got something big. You've been sitting here all this time, and you didn't notice that? What a schmuck! Hey, want to bet blind on the next hand? Neither of us will look at our hand. C'mon, it will be fun! C'mon, let's do it!"
It was shortly thereafter that Doug's wife Ancha polished off my remaining chips and I sleepwalked back to my room for a few hours rest before having to hop on a plane.
By now, dear readers, you are probably wondering what this has to do with anything, other than, perhaps, sharpening your own poker skills.
Well, it struck me as I finally fell into my hotel room bed that there was remarkable profundity in Gary K.'s words, "Play the man, not the hand."
In fact, they encapsulate one of the underlying principles of the macro-economic analysis we do here at Casey Research, but it took Gary K.'s words to make me realize it.
In the context of the economy and markets, the "man" now sitting across the table is none other than Uncle Sam (or John Bull, or whoever it is that commands the heights of power in your country).
You see, like a poker player, we each arrive at the table with a certain amount of chips (assets) and do the best we can to shepherd those chips. We do so by arranging our cards (portfolio) in the way we believe will have the most favorable outcome.
In an ideal world - a world that will never exist - our competition would consist almost entirely of other businesspeople with whom we would engage in the free exchange of goods and services, ideally with the satisfactory result that our pile of chips grows. Or it would be depleted only in exchange for goods and services that we preferred to hold more than the assets we gave up.
In today's world, however, the most dangerous player at the table by a country mile is the government, an entity whose own pile of chips has been extorted from the rest of the players.
Which brings me to Gary K.'s pearls of wisdom, "Play the man, not the hand." In the same way that my more attentive mentor spotted my competition as a rigorously "tight" player, we can look at Uncle Sam and, by his actions, adjust our own play.
So, who is this Uncle Sam? A quick scan of the headlines tells me all I need to know about those in charge in these United States. Some snippets.
Feds threaten Apple
With the Feds reportedly only "days away" from launching a full-scale antitrust inquiry, Apple is reportedly tweaking its iPhone and iPad developer program to dodge a probe into its business practices. At issue may be Apple's ability to tightly control the mobile platforms it has invented. Story here.
Bottled water banned The town of Concord has banned the sale of bottled drinking water in town beginning in 2011. "We only have one planet and I just don't want to see it spoiled," said Jean Hill, who introduced the measure at Concord's Town Meeting. Hill said that New York, Illinois and Virginia, as well as more than 100 cities, have taken action to cut spending on bottled water. Story here.
Americans bombarded with cancer causes Americans are being "bombarded" with chemicals, gases and radiation that can cause cancer, and the federal government must do far more to protect them, presidential cancer advisers said on Thursday. Story here.
Biden: U.S. committed to missile defense in Europe BRUSSELS - U.S. Vice President Joe Biden said Thursday that Washington remains determined to deploy its planned anti-missile system in Europe to counter the danger of Iran's nuclear program and its long-range ballistic missiles.
."In the face of the threat that Iran poses, we are committed to the security of our allies," Biden said. Story here.
Freddie Mac posts loss, sees need for govt funds WASHINGTON/NEW YORK, May 5 (Reuters) - Freddie Mac (FRE.N), the second-largest provider of U.S. residential mortgage funds, on Wednesday said it lost $8.0 billion in the first quarter and warned that it would continue to need government funds because the housing market remains fragile. Story here.
Democrats at ramming speed The White House wants to pass as much legislation as possible before losing its big majorities, no matter how unpopular its proposals are.
Washington has never been held in lower esteem by Americans than it is today. Yet those in control of Washington-President Obama and congressional Democrats-are bent on enacting a series of sweeping domestic policy changes this year that have one thing in common: They are unpopular, in whole or in part. Story here.
Vat Pack? Some Republicans support value-added tax Leading Democrats on the commission tried during the first week of meetings to finesse their way toward a discussion of what they consider inevitable - by arguing that any tax hikes would be "pro-growth."
"If we can put forward some practical proposals that control the rate of spending in the future and that raise revenues in a pro-growth way, I think we'll get a hearing in the Congress," said Alice Rivlin, a former White House budget director for President Jimmy Carter, who is one of 18 commission members.
If you didn't read the word "tax" in the previous sentence, that's because most who favor raising taxes don't like to use the word. Instead they use "revenue," as in the money that comes to the government from taxpayers.
Commission co-chair Erskine Bowles made clear last week that any recommendations he puts forth or supports by the Dec. 1 due date will include higher taxes. The three working groups that he set up to meet weekly over the next several months are focused on mandatory spending, discretionary spending and revenue reform. Story here.
Contained in those few easily accessible snippets, we see a clear portrait of a government looking to tax, regulate, obstruct, nationalize, and spend money it doesn't have, on threats that don't exist or are massively exaggerated if they do.
As you know, I could go on but won't. Well, not for very long.
It is increasingly important to pay close attention to "the man" - at least if you are to have any hope of avoiding being worn down to the stub by your government.
Failing to legally optimize your tax profile, for instance, will leave you like a fattened veal calf, boxed up and ready for slaughter. (More on that momentarily - the tax part, that is).
Likewise, having all your chips in a single country leaves you massively exposed. And not just to the shifting whims of the government, but also to market forces and even to the next-door neighbor who, out of a job, might accidentally trip over your garbage cans and sue you for everything you are worth.
But it is the "man" across the table at this moment who most warrants watching - as he has shown his colors in a way that you don't need to be a Gary K. to spot. He's broke, politically desperate, meddlesome, grasping, nationalizing, pandering, militarized, and altogether out of control.
Watch your chips.
(Ed. Note: Just for the heck of it, I would love to connect with Gary K. again, if for no other reason than to thank him for the poker lessons. Let's try a little experiment in social interconnectivity. Do you know Gary K.? He's thirty-something, lives in Brooklyn, is a partner in a successful packaging business, and travels to Vegas to visit clients five or six times a year. If that sounds like a person you know, drop me a line at David@CaseyResearch.com. )
