Crossing the threshold

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Weighing money in poker - By Mike Caro
(A version of this entry was originally published (2007) in Casino Player.)

If I told you that you need to make critical decisions whether you’re ahead or behind in a poker game, you’d probably agree. Most intelligent players would. But something strange happens in poker games when intellectually capable players get caught up in the action.

If they’re losing, they may play well for a period of time, but when the loss grows so large as to seem hopeless, their behavior changes. Often you’ll see reasonable players self-destruct in a poker game after they take one too many bad beats and fall behind a bit more than they’re able to tolerate.

If this has ever happened to you, today’s the day you’re going to learn the secret to saving a lot of money. First I’ll tell you what I tell my students: Money you don’t lose is exactly the same as money you win. In fact, you should stop caring about whether you cashed out winning or losing. If you won, but could have won more, the difference between what you won and could have won is a loss. If you lost but could have lost more, the difference between what you lost and what you could have lost is a win.

Repeat the previous paragraph until you have no problem accepting it intellectually. But wait! When you’re in the heat of poker combat, losing hand after hand, getting buried, I suggest that you no longer feel comfortable with that statement. Here’s what I mean: If you’re a medium-limit player, figuring that the worst that might happen is you’ll lose $3,000, your mind gets scrambled when you find yourself losing, say, $5,673. I suggest that when you first sat down to play, losing $300 in a pot (or winning it) meant something to you. It felt like real money.

Crossing the threshold

But now, I’m speculating that if you lose another $300 and find yourself down $5,973, it won’t feel any different at all. Actually, at this point, you’ve crossed Caro’s Threshold of Misery *– the point where you’ve maxed out your ability to absorb emotional pain and where small additional losses don’t feel any worse. That’s a dangerous mental state to visit, because you stop making critical decisions.

This can happen in real-life, too, when romances or businesses fail. You’ve got to remind yourself that, even though the shock of what’s happened consumes you, there will come a time when your other decisions will matter. So, you’ve got to keep making them rationally.

Proof

Now I’m going to prove to you intellectually why losing $5,673 rather than $5,973 is just as good – and should feel just as good – as winning $300, rather than breaking even. Suppose you decided to devote a year to being a professional poker player, because you think you have the skill. But yours is a very unlucky adventure and by year’s end you’re losing exactly $200,000.

So, now I come up to you and say, “You know, I can rewrite poker history so that you’ll be even for the year. Would you like me to do that?”

And you say, “Sure, Mad Genius. I’d be so grateful.”

And I say, “There’s only one thing I need to know from you. Would you like me to rewrite poker history by adding a little to each win you had during the year, so that you break even instead of losing $200,000. Or would you like me to subtract a little from each loss, so that you break even instead of losing $200,000.”

Either

You quickly respond, “Either way. Just so I get my money back, it doesn’t matter.”

And you’re so very right! If I shave $300 here and $1,800 there off your losses, the result is exactly the same as if I add those sums to your wins. It’s not sort of the same money or theoretically the same money, but exactly the same money. You can spend it.

That’s what I want you to realize next time you’re losing badly in a poker game. It’s no different than when you sat down and looked at your first hand. In fact, every hand you play is your first hand from this point on, and you need to treat it that way. — MC