Re: Terror in Poker and Finance Part II
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I'm sorry, I don't see it. You claim, "The object is to get your maximize your return to standard deviation ratio, thus maximizing your Sharpe ratio," but that is not correct. The object is to make the most money.
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Right. Don't let these guys fool you, Sweet. Poker differs from finance, because your time is inherently consumed playing poker, and EV can go down very quickly if you try to play higher stakes.
Where is the feedback in the formula? If the author had shown how the EV of the game adjusted (and hence the Sharpe ratio) as a result of making -EV decisions, that would have been some new material. There would still be lots of issues, but that would probably be sufficient to drive home the only real point - people playing on short bankrolls have extra incentive to avoid wacko tables, because variance reducing play at those tables does not really help.
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