what should i be doing with surplus bankroll?

[cmyr]

Just a quick question on getting the most out of money i have lying around. I play pot-limit omaha, and the variance in the game inclines me to keep a pretty big bankroll. I tend to have under a half of it in use (i.e. on sites) at a time, which means i have between 30 and 40 grand lying around. I'm in Canada, but I have a USD bank account with TD Financial. Currently, I keep the roll I'm not using in GICs and term-deposits, which yield 4.15-4.25%, and which are completely liquid. I've been begining to wonder however if it might be a better idea to keep this money (or at least the body of it) in an index-fund, where I could earn roughly double that.


How long would 20k have to be in an index fund to justify the trade fees? (I use TD Waterhouse's online brokerage, and I think the fees are still something like 24.99 a transaction for the base account.)


Is there anything else along thsee lines that I should be thinking about?



Oh, and as I was going to submit I thought up another related question: I keep 5 months living expenses (about 10k) in a savings account that earns me 4% interest. might it be worth keeping some of this money in an index fund, or is the risk of ruin unacceptable for money I will need to pay the rent with if I have a downswing? Again, is there anything else here I should be thinking about?


Forgive my ignorance around this stuff, personal finance isn't something I've ever really payed tons of attention to.

[Newt_Buggs]

Your best option would probably be putting it in vanguard.com. If you do a search on vanguard in this forum you should find plenty of information on which funds to chose.

[Nomad84]

I have a significant portion of my money (I'm 23, so it isn't a ton) in savings for use in a few months for a down payment, closing costs, and other associated costs of buying my first home. Personally, I am not willing to take on any real risk with this money. I'm also not willing to bounce it back and forth between various online high yield savings accounts, partly due to my own laziness and partly because that probably won't look good when I apply for a mortgage. With those qualifiers, I decided to just keep my money in Vanguard. I put all of my house savings in their Prime Money Market Fund, which was yielding 5.1% or so last time I checked. It doesn't sound like all that much difference, but that extra .9% on 40k is $360/year.

[Timosil]

How old are you? Do you have a family? How risk averse are you? How much do you need in liquid funds?

I would invest in uranium mining companies if you are willing to accept some risk for a long term EV+ investment...otherwise just invest in a low cost international mutual fund (i like east europe, east asia, and brazil)...but you should hedge against the goddamn US dollar

[maxtower]

You shouldn't be buying any stocks with bankroll money. Keep it in money market funds. You should be able to find something yielding 5%+

[Mr. Now]

max,

Mr. Now reads through your posts here and agrees 100%. The poker has a ton of volatility; successful players are adequately bankrolled to acceptable risk of ruin, and banking the rest in highly liquid low-risk instruments. The reason is the high volatility (risk) in the high-reward poker component.

max is looking at the poker activity as part of a portfolio of instruments. max knows WTF he is talking about.

Mr. Now wonders if max might be willing to elaborate on his MPT view of poker bankroll-- in much greater detail-- on this thread. Mr. Now also wonders if Barron might provide commentary. Both of these men make posts consistent with deep knowledge of MPT & finance.

RoR Reference (poker component of portfolio):
http://www.traderscalm.com/rorhandiwork2.html

[DcifrThs]

[ QUOTE ]
max,

Mr. Now reads through your posts here and agrees 100%. The poker has a ton of volatility; successful players are adequately bankrolled to acceptable risk of ruin, and banking the rest in highly liquid low-risk instruments. The reason is the high volatility (risk) in the high-reward poker component.

max is looking at the poker activity as part of a portfolio of instruments.

[/ QUOTE ]

man, thats a good point. i don't have $ at risk at poker anymore but i'm soon to be helping a friend of mine and poker player structure his investments both 'cause he's a great kid and 'cause i'll enjoy it.

some off the cuff general thoughts on it:

mid road poker players have a really tough time banking on $.

1) they could suffer large swings (see the high limit posts about MASSIVE variance)

2) poker could be outlawed

3) the fish could leave (game could fall in popularity)

4) taxes could unexpectedly increase or some other unexpected thing could come about to make poker more costly.

but how do those things correlate to your active & passive investments? and how can a responsible poker player invest?

my first thought would be to diversify the non-bankroll related funds away from poker & NOT use them as a bankroll (imagine they're illiquid). this is different than the conventional thoughts about bankroll: that it includes ALL liquid cash.

sure, it includes all liquid cash if you don't care about retirement and are only maximizing EV (and your ability and means to play poker). you should put money away that you will never touch in addition to a hugely padded roll.

since poker has so many other risks though, risk averse players (i know that could be an oxy moron), or 'responsible' players shouldn't allocate as much money as they currently do to betting on stocks...or for alpha generation in general since that $ has a higher tail risk embedded anyways (ESPECIALLY if you only have a few bets going at a time).

'im tired of typing and thinking now though and need a break.

this is definitely the thread to discuss this thread though. anybody else have other thoughts??

thanks,
Barron

[DcifrThs]

[ QUOTE ]
max,

Mr. Now reads through your posts here and agrees 100%. The poker has a ton of volatility; successful players are adequately bankrolled to acceptable risk of ruin, and banking the rest in highly liquid low-risk instruments. The reason is the high volatility (risk) in the high-reward poker component.

max is looking at the poker activity as part of a portfolio of instruments. max knows WTF he is talking about.

Mr. Now wonders if max might be willing to elaborate on his MPT view of poker bankroll-- in much greater detail-- on this thread. Mr. Now also wonders if Barron might provide commentary. Both of these men make posts consistent with deep knowledge of MPT & finance.

RoR Reference (poker component of portfolio):
http://www.traderscalm.com/rorhandiwork2.html

[/ QUOTE ]

thanks for your kind words.

personally i wouldn't use MPT (modern portfolio theory...basically the use of sharpe ratio etc. to optimize portfolios. post-MPT is concerned more with loss risks rather than upside risks and is interesting also). i would use it for the funds the poker player chooses to set aside though with some additional thought about risks not related to the assets in general.

thanks again for your kind thoughts and i hope the above post helps.
Barron

[Fishhead24]

SILVER, IOWA FARMLAND, and WALMART will be three things immediately to take a look at.


Also, foreclosures in many large cities will make many instant relatively easy money.

[Mr. Now]

Barron,

You are clearly very knowledgeable. Mr. Now gets your point about Mr. Sharpe's ratio relative to all of MPT. How about 200 or 300 words regarding your take on Mr. Sortino's ratio?