Review: The Poker Face of Wall Street

March 1, 2009
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Yesterday night I finished The Poker Face of Wall Street by Aaron Brown. It’s a somewhat disorganized combination of poker theory, anecdotes from Wall Street and private poker games, and gambling economics. Overall I enjoyed it very much and learned a lot.

Here are some of the quotes I liked. This list will be out-of-context to anyone who hasn’t read the book but they are intented to suggest topics that I found intriguing and would be interested in discussing.

“I want to play against as many bettors as possible, since I’ll likely beat them all or lose to them all.” (mentioned previously) 73

Explaining the author’s theory of gambling as an alternative financial structure, “One of the best ways to form capital is to concentrate assets. Suppose 1000 people each have $1000 under their mattresses for emergencies. Talk them into holding a lottery and letting one lucky person win the entire million and -viola!- instant capital. Nobody keeps a million bucks under their mattress; most people would invest it. … The 999 losers will engage in economic activity to rebuild their emergency funds” 79

Page 126 has an interesting perspective on how people do not make utility-based purchases, rather t


Yesterday night I finished The Poker Face of Wall Street by Aaron Brown. It’s a somewhat disorganized combination of poker theory, anecdotes from Wall Street and private poker games, and gambling economics. Overall I enjoyed it very much and learned a lot.

Here are some of the quotes I liked. This list will be out-of-context to anyone who hasn’t read the book but they are intented to suggest topics that I found intriguing and would be interested in discussing.

“I want to play against as many bettors as possible, since I’ll likely beat them all or lose to them all.” (mentioned previously) 73

Explaining the author’s theory of gambling as an alternative financial structure, “One of the best ways to form capital is to concentrate assets. Suppose 1000 people each have $1000 under their mattresses for emergencies. Talk them into holding a lottery and letting one lucky person win the entire million and -viola!- instant capital. Nobody keeps a million bucks under their mattress; most people would invest it. … The 999 losers will engage in economic activity to rebuild their emergency funds” 79

Page 126 has an interesting perspective on how people do not make utility-based purchases, rather they simply enjoy spending as a social activity. Here’s one excerpt illustrating how unintuitive purely utility based explanations are, “Do you explain the explosion of retail sales in the Christmas season as businesses responding to demand created by religious celebrations or as consumers responding to an altered shopping experience created as successful merchandizing ploy?” 126

Brown’s tidbits on historical economic approaches that were abandoned but contain powerful forgotten insights are intriguing, “[Law, a French economist] understood that getting people to work harder was a marketing challenge. … Instead, you had to persuade people to play a game [by introducing paper money in the 1700s]” 128

Brown’s writing is very honest and empathic, I could relate to his thought process after being accused of cheating on page 181 having been through a similar situation myself. The book is nonfiction but it is as readable, entertaining, and philosophical as any good fiction, this is just one example. Another, on page 185, “Life’s a little complicated sometimes, but nowhere near as complicated as talking about life”. And, playfully chiding human curiosity and risk-taking, “Always keep in mind the idiot in the horror movie who finds the old scroll with the spell for summoning demons and decides to see whether [magic is real]” 231. Finally, the topic of people’s physical appearances is interesting in the context of a poker book, “what is dressing well except trying to create an information mirage” 278

I hadn’t really understood how to bluff (although I thought I did) before reading these lines, “You expect to lose money when you bluff, but more than make it up on other hands. When you have a strong hand, “you’re more likely to get called, because people know you might be bluffing. … Bluffing doesn’t depend on fooling people; in fact, it works only if people know you do it.” 238

I enjoyed the poker theory sections but I’ve never read a poker book. One part that made sense and helped me in a Texas Hold’em game I coincidentally played immediately after reading, was the section on the flow of other players’ strategies from loose to tight and back like a judo match (page 244). He says if they are playing even 10% tight, you should play very loose but if they are playing loose then you should stay in enough hands to be about half as loose as they are. So the optimal counter-strategy is not symmetrical. It makes more sense with the book’s detail.

Brown is interested in psychological research on gambling and he relates an interesting result, “For example, people normally make constant tiny movements in their muscles, possibly as a way of staying loose and comfortable. But in stressful situations, they freeze up. … The guy showing more stress lost the hand between 60 percent and 80 percent of the time [because he realized he was making bad decisions but was attached to the large pot.]” 301

The main criticism in Amazon reviews is that the book is disorganized, which seems silly to me since my main intention in reading a book is never to be awed by it’s organization. An encyclopedia might face a similar criticism. Honestly I think those reviewers have confused motivations for reading. The book may not be directly related to algorithmic trading but it is full of gems on risk and Wall Street so I thoroughly enjoyed it all the way to the end.

Like I mentioned above, feel free to leave a comment, especially if you read the book too- I’d like to know which parts you found most insightful.