Claire's Random Thoughts

I always had an interest in poker since the day I learned how to play it. Even though I’m not of casino gambling age, it has always been a medium of adrenaline rush unlike any other for me. It’s amazing how much the game can relate to the business world. Maybe if I play poker more often, I can also become a more successful businessperson. After all, if a CEO says that “everything he knows about business he learned from poker,” poker skills may be even more important than I thought they were.

EVALUATING MARKET OPPORTUNITIES

• Table selection is the most important decision you can make.
• It’s okay to switch tables if you discover it’s too hard to win at your table.
• If there are too many competitors (some irrational or inexperienced), even if you’re the best it’s a lot harder to win.

MARKETING AND BRANDING

• Act weak when strong, act strong when weak. Know when to bluff.
• Your “brand” is important.
• Help shape the stories that people are telling about you.

FINANCIALS

• Always be prepared for the worst possible scenario.
• The guy who wins the most hands is not the guy who makes the most money in the long run.
• The guy who never loses a hand is not the guy who makes the most money in the long run.
• Go for positive expected value, not what’s least risky.
• Make sure your bankroll is large enough for the game you’re playing and the risks you’re taking.
• Play only with what you can afford to lose.
• Remember it’s a long term game. You will win or lose individual sessions, but it’s what happens in the long term that matters.

STRATEGY

• Don’t play games that you don’t understand, even if you see lots of other people making money from them.
• Figure out the game when the stakes aren’t high.
• Don’t cheat. Cheaters never win in the long run.
• Stick to your principles.
• You need to adjust your style of play throughout the night as the dynamics of the game change. Be flexible.
• Be patient and think long term.
• The players with the most stamina and focus usually win.
• Differentiate yourself. Do the opposite of what the rest of the table is doing.
• Hope is not a good plan.
• Don’t let yourself go “on tilt”. It’s much more cost effective to take a break, walk around, or leave the game for the night.

CONTINUAL LEARNING

• Educate yourself. Read books and learn from others who have done it before.
• Learn by doing. Theory is nice, but nothing replaces actual experience.
• Learn by surrounding yourself with talented players.
• Just because you win a hand doesn’t mean you’re good and you don’t have more learning to do. You might have just gotten lucky.
• Don’t be afraid to ask for advice.

CULTURE

• You’ve gotta love the game. To become really good, you need to live it and sleep it.
• Don’t be cocky. Don’t be flashy. There’s always someone better than you.
• Be nice and make friends. It’s a small community.
• Share what you’ve learned with others.
• Look for opportunities beyond just the game you sat down to play. You never know who you’re going to meet, including new friends for life or new business contacts.
• Have fun. The game is a lot more enjoyable when you’re trying to do more than just make money.

This was originally posted on Zappos Blog by CEO Tony H. He’s working on a book about the business and poker concept. When it comes out, it might be one of the few books I pick up.

When I see a deal good enough for me to profit from, I simply can’t resist. This mess started with this thread.

Seems like a good deal, right? Buy the Canon SD1100 camera which is a very popular and easily resellable model for $89.99 plus shipping and ebay it for $150+, even a better deal if you buy two, because shipping is the same price. So guess what? I bought two.

A few days later, I got a call from Chase (I used my Chase card to pay for this purchase) with a potential fraud alert. They had me verify a charge from “an electronics store”, so since I remembered that I ordered my two Canon SD1100 cameras, I verified the charge. Obviously, a company should be held suspicious if even credit card companies know that they may be fraudulent. I briefly considered this when I got the phone call, but I still wanted to trust Conns and hoped to received my package soon.

For those of you who don’t know, I buy and sell a lot of things on the internet to make a little money that I treat as my allowance. I ordered two Canon SD1100 cameras online about a week ago for a great price and have been waiting on them for over a week so I could have inventory to sell. Today, a FedEx package that I had been anticipating for about a week arrived on my front porch. I was momentarily excited when it came, because I was running low on inventory, and it would be a great replenishment.

I was expecting two Canon SD1100’s, because they were what I ordered. Simple, isn’t it? To my dismay, I opened the package to find two unfamiliar looking boxes (yes, I know how Canon boxes look like by now). It turns out that I somehow received two worthless Samsung BL1050 cameras. Obviously, the initial excitement quickly faded away. You know what was even more ridiculous? The enclosed note it came with. So, they finally admitted that they didn’t send me the products I ordered. If you’re out of the damn item I ordered, let me know and give me the opportunity to cancel my order before you substitute whatever piece of shit you could find! I find it almost hilarious how they tried to convince me that their replacement could possibly be better than the camera I ordered. If so, then why is the retail price only half of that of the Canon SD1100? Maybe because there is absolutely no contest in image quality? One’s a well known camera brand name while the other’s just some regular electronics manufacturer? Seriously, Conns. If you don’t want to honor your sale price for the product you were advertising as “on sale” for $89.99, the right thing for you to do would be to simply cancel the order. You clearly had no intentions of selling me the camera I ordered if you just baited and switched. Calling the Samsung BL1050 an “upgrade” from a Canon SD1100 is just absolutely ludicrous. It’s like buying a Ferrari and receiving a Mustang as an “upgrade”.

On top of everything else, I’m personally insulted that someone would think I’m stupid enough to accept the evidently inferior cameras as an “upgrade”.

Maybe if a company names itself “Conns” it should hint that they’re con-artists. I have officially first-handedly experience the bait and switch scam. I guess when you buy and sell as many things as I do on the internet, it’s only inevitable that you will get scammed every once in a while. That’s what credit card buyer protection is for, I guess.

I’m really tempted to send some crappier $30 digital camera and write a note saying “Sorry, but the camera you sent me was not the one I wanted, so I’m returning one that’s an upgrade over the one you sent me.” Unfortunately, I still value my refund, so this plan will not take effect.

Anyway, as the note instructed me to do if I didn’t want to accept my “upgrade”, I sent the cameras back using the provided shipping label. Honestly, it wouldn’t surprise me if later they pretend that they didn’t receive the cameras I sent back, in which I will have to dispute the charge with the credit card company. Maybe it won’t be so difficult, considering they already recognized the charge as potentially fraudulent earlier and even had to call me about it. Obviously, this company’s already somewhat blacklisted in Chase’s database of merchants.

Bottom line: Don’t order from Conns when they have anything “on sale”. In fact, boycott their B&M stores too, because a company like them doesn’t deserve your business.

The lost money fallacy is often also known as the sunken cost fallacy. When we spend money on something we own, natural human psychology produces the desire for us to keep it or put more money into it when it is most cost efficient to let it go. The bottom line is, no matter how much you paid for something, it is worth whatever it is worth at its present state. The money you put into your investment or purchase that has been lost will not be recovered simply because you’re making desperate attempts to keep the investment or product afloat. The price you originally paid for it should not affect your decision in what to do with it. Take a look at the examples below, and see how you would act if you were in these situations.

Example 1:
In the current economic state with declining securities, such as stocks, housing values, and commodities, we are often hesitant in selling our losing securities. People often irrationally hold onto their losing stocks that are currently trading at less than they paid for, because they don’t want to lose the money they originally invested. This causes them to lose more money on their bad investments as the stocks continue to decline.

Example 2:
You buy a show ticket on impulse thinking you got a good deal, but later you decide that you really don’t want to watch it anymore after you find you don’t have the least bit of interest in what it’s about. Natural human psychology will cause you to spend time watching the show anyway, just because you paid for it. You end up watching the show wasting valuable time and needing to endure watching a show that you would really prefer not to see.

In example 1, if you would not buy the stock at its current market price and state, then you should sell it regardless of how much you paid for it. Holding onto the stock when you don’t think it will be a good investment will only lead to greater losses.

In example 2, it would be most efficient if you didn’t watch a show that you wouldn’t enjoy, because you could spend that time and energy doing something else. The fact that you already paid for the show will not make it any more enjoyable for you. Give the ticket away and find something better to do with your time.

Remember that money already spent and lost should not affect your financial decisions. It’s just gone.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers”, he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his “fair share?”

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay…And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man, “but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too.
It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

So, the nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.
In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. From Mike (Corporation and the wealthy are already doing this!)

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia
Oh, and I originally found this on Billy’s facebook note.

Federal funds rate: 5.25 last month, 4.75 this month

Discount Rate: 5.75 last month, 5.25 this month

Prime Rate: 8.25 last month, 7.75 this month

Basically, interest rates are going down. This is bad news for high-yield savers like myself, because I can kiss my liquid 5 percent APY online banking accounts goodbye now.

ING Direct has already dropped their online savings rate from 4.5%-4.3%, and other high-yield accounts are soon to follow, since banks tend to look at and react to each others’ rates. Savers are lucky if the rates stay above 4 percent.

Since I’ve become obsessed with getting the best rates a few months ago, I never understood why anyone would choose a CD over a nice liquid online savings account. Now, I see why and have officially locked a nice portion of my money into a 5.1% APY Certificate of Deposits.

If I were a financial advisor, then I would recommend locking into a CD with at least 5% yieldfor any term 6-12 months at this point in time. In the near future, these rates will be much higher than variable rate accounts due to the federal rates cuts.

Recommended accounts (I am in no way affiliated with these banks):
I recommend opening two accounts with different terms, because I can’t be sure exactly when the rates will bounce back up.
Washington Mutual’s 12 Month 5.10% APY CD.
This CD is binding for 12 months, but it will guarantee an interest rate of over 5% after the variable rates drop. I’ve invested a good amount into this CD, because I feel like 12 months is a reasonable term. Anything longer than that, and you can’t be sure how rates will change.

Bank of America’s 5.10% 4 month CD
I had a personal dislike for Bank of America, because my parents used to put my money there for 0.20% interest when I was younger. Thinking about how much potential interest I lost there, I hesitated to invest more in their bank, but this CD was too good of a deal to resist. The term is only four months long, which could be good or bad. If the interest rates bounce back up soon, then this CD would be a much better deal than the 12-month WaMu one. Otherwise, not. Since I’m not sure, I split my money up.