Brian Townsend's Downswing (for all the Brian Townsend haters)

[fraac]

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f,

Just read Brian's latest blog post. I think that he continues to draw too strong a correlation between his play and his results and still does not acknowledge the impact that variance really plays in this game.

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I think could apply to life for most of us.

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Yup. Countryside, acid, letting go of what you can't control ftw.

[Jiganti]

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f,

Just read Brian's latest blog post. I think that he continues to draw too strong a correlation between his play and his results and still does not acknowledge the impact that variance really plays in this game.

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I think could apply to life for most of us.

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Yup. Countryside, acid, letting go of what you can't control ftw.

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[Anzat]

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r3,

CardRunners is putting on a big membership fair soon, so those numbers should be going up significantly in the near future.

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I hope they have those giant turkey legs.

[bustedromo]

I get the strong feeling there aren't too many experienced traders on these boards. Definitely not traders of my vintage.

Surviving as a trader/gambler through extreme variance without going broke is something that can only be learned from experience.

It's entirely possible for talented traders/gamblers to shoot the moon early in their careers. Normal distributions say it's possible and it does happen. However, shooting the moon doesn't mean you have the ability to survive extreme fluctuations in bankroll. More specifically, it doesn't give you the experience and tools to spot oncoming extreme fluctuations in bankroll.

Ideally, you want to avoid putting on (two-sided) risk outside of your ability to understand its origins, and most importantly your ability to anticipate and control an outsized random component.

This is what has just happenned in the mortgage-backed credit-markets. The sub-prime mess, as it's called. The players running the hedge funds that are all going to go busto shortly were not at all stupid, and they were not inexperienced either (at least at lower levels of risk, and/or in other games). However, in terms of outlier experiences, they had little or no experience. By all playing the same game, even as many other players distanced themselves from it, effectively they boxed themselves in into an illiquidity trap that sprang when even moderate negative events occurred for their models. Bottom line, when it became imperative to offload risk or die, there was no one to buy it.

The above obviously is not a direct analogy to poker.

However, all gamblers who experience a tremendous upswing without ever having experienced the game itself go suddenly ferociously wrong, tend to trap themselves in the same fashion. They gradually "modify" (semi-consciously misinterpret) events so that the world conforms nicely to their attribution of success primarily to their own ability or patterns they have perfected.

This is what I refer to as the first rule of professional gambling: never mistake what you think should be happenning with what is actually happenning.

How could the game go wrong for Townsend in a sudden ferocious manner ? I don't really know. I don't play poker at that level, at those stakes, against those players. I'll throw out a guess: within increased visibility comes increased scrutinization and his opponents are onto many patterns in his play.

But knowing why the game might change is not nearly as important as recognizing that it is in the midst of changing and you need to get out and re-invent yourself before playing again. (Get out for practical purposes, not get totally out.)

9-12 months ago it's entirely reasonable to think that some of these highly-levered mortgage-backed hedge fund guys could have recognized that the game was changing, and they could have unwound their positions and moved on to something else. But I'll bet 99% of them didn't. They were making too much money, they were superstars, everyone loved them, they were smarter than everyone else, etc., etc. In short, they had long ago stopped asking themselves the question "Is this a game I want to play?" because they had in many ways become the game.

I see some of this in Townsend's blog. He seems to be veering into thought territory where the game must always conform to him (e.g. he can always figure out the leaks in his game, concentrate better, ride through variance, study his opponents more and figure them out, etc). If he had gone busto from on high before, he would instead be looking at the variance (downside AND upside) that he is experiencing this year and be seriously asking himself if he should just get out of the game.

[ArmenH]

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busted,

There would be a chance that he goes broke except for the $400,000 a month he's pulling in from his 25% ownership share of CardRunners.

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400k a month? Are you sure of these numbers?

[NU Star]

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busted,

There would be a chance that he goes broke except for the $400,000 a month he's pulling in from his 25% ownership share of CardRunners.

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400k a month? Are you sure of these numbers?

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Thread? Have you read it all?

[ArmenH]

Experiencing a massive downswing is nothing new to Brian. He has recouped before by remaining disciplined and re-evaluating his game,so he knows how to handle variance.

Also, people assume he was a loser this summer in the 1k/2k games they played in Bobbys room. Reality is, he actually left that game a winner even after bluffing Bobby Baldwin in that huge PLO hand.....

By exposing himself in his blog and his forum posts he leaves alot of room for speculation and criticisms. In my opinion, this just proves his confidence for his game and determination to remain the best the game has to offer.

There isn't a doubt in my mind that Brian invests more time into improving his game than any poker player in the world. He genuinely loves the game and strives to improve everyday and learn from his mistakes. He has surely proven himself to date and there isn't a doubt in my mind that he will come out back on top.

[realjaydub]

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Experiencing a massive downswing is nothing new to Brian.

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ORLY?

Last time I've checked, he's never had a "massive downswing".

[Steel_Pots]

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I get the strong feeling there aren't too many experienced traders on these boards. Definitely not traders of my vintage.

Surviving as a trader/gambler through extreme variance without going broke is something that can only be learned from experience.

It's entirely possible for talented traders/gamblers to shoot the moon early in their careers. Normal distributions say it's possible and it does happen. However, shooting the moon doesn't mean you have the ability to survive extreme fluctuations in bankroll. More specifically, it doesn't give you the experience and tools to spot oncoming extreme fluctuations in bankroll.

Ideally, you want to avoid putting on (two-sided) risk outside of your ability to understand its origins, and most importantly your ability to anticipate and control an outsized random component.

This is what has just happenned in the mortgage-backed credit-markets. The sub-prime mess, as it's called. The players running the hedge funds that are all going to go busto shortly were not at all stupid, and they were not inexperienced either (at least at lower levels of risk, and/or in other games). However, in terms of outlier experiences, they had little or no experience. By all playing the same game, even as many other players distanced themselves from it, effectively they boxed themselves in into an illiquidity trap that sprang when even moderate negative events occurred for their models. Bottom line, when it became imperative to offload risk or die, there was no one to buy it.

The above obviously is not a direct analogy to poker.

However, all gamblers who experience a tremendous upswing without ever having experienced the game itself go suddenly ferociously wrong, tend to trap themselves in the same fashion. They gradually "modify" (semi-consciously misinterpret) events so that the world conforms nicely to their attribution of success primarily to their own ability or patterns they have perfected.

This is what I refer to as the first rule of professional gambling: never mistake what you think should be happenning with what is actually happenning.

How could the game go wrong for Townsend in a sudden ferocious manner ? I don't really know. I don't play poker at that level, at those stakes, against those players. I'll throw out a guess: within increased visibility comes increased scrutinization and his opponents are onto many patterns in his play.

But knowing why the game might change is not nearly as important as recognizing that it is in the midst of changing and you need to get out and re-invent yourself before playing again. (Get out for practical purposes, not get totally out.)

9-12 months ago it's entirely reasonable to think that some of these highly-levered mortgage-backed hedge fund guys could have recognized that the game was changing, and they could have unwound their positions and moved on to something else. But I'll bet 99% of them didn't. They were making too much money, they were superstars, everyone loved them, they were smarter than everyone else, etc., etc. In short, they had long ago stopped asking themselves the question "Is this a game I want to play?" because they had in many ways become the game.

I see some of this in Townsend's blog. He seems to be veering into thought territory where the game must always conform to him (e.g. he can always figure out the leaks in his game, concentrate better, ride through variance, study his opponents more and figure them out, etc). If he had gone busto from on high before, he would instead be looking at the variance (downside AND upside) that he is experiencing this year and be seriously asking himself if he should just get out of the game.

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This is solid. Your name isn't Nassim Taleb, is it?

[RichardHurtz]

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just saw CR has 8000 registered members
my guess is then about 350k a year for BT if he indeed has 25%

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Anyone can register as a member and pay nothing. YOu can always take it one step further and pay for a membership. Doubt there are 8K people paying.