Wednesday, September 24, 2008

Einhorn the Whippersnapper, and Exploring the Stop and Go

Watching this Tuesday's WSOP coverage on ESPN -- only the second time I have done so this year btw since televised poker became so ungodly boring -- I was cracked up a bit by Mr. David Einhorn, who was at one of the featured tables with two other well-known pros. I forget their names, I wasn't watching that closely, but one guy was the hispanic guy with the same name as his father, and I think the other pro there was none other than Chris Moneymaker himself. Anyways if you can't tell, I wasn't that interested in the coverage itself -- which to me is at its absolute low point ever as far as substance goes and has really degenerated into just showing some allins and not even any interesting hands anymore -- but I was very interested in seeing this David Einhorn for the first time. Although I knew he had finished in the final two tables of the WSOP Main Event a couple of years ago, I had never actually seen what he looks like before, and I have a bit of personal involvement with Mr. Einhorn.

You see, David Einhorn runs hedge fun Greenlight Capital, and has been very successful for some 10 years at that. Late last November, Einhorn spoke at the Third Annual Value Investing Congress in New York, and in his speech, he mentioned out of nowhere really that he thought Lehman Brothers was a good short sell candidate. Mind you, this was with the stock trading just over $60 a share. Many people at Lehman paid no attention to this, or didn't notice it at all -- despite being a large global investment bank, one of the funny things I always throught about working there is that once you leave the trading floor, most of the employees don't know (or want to know) the first thing about finance or investing -- but I saw the story and read it with interest, mostly because I thought this guy was some kind of dick. Back then I still believed confidently in Lehman management, and when they told me Einhorn's claims were the baseless, self-interested whines of just another short-seller, I took them at their word.

As the months wore on, though, Lehman shares continued to weaken, then Bear Stearns collapsed, and all the while this little prick David Einhorn kept shelling LEH shares every chance he could get in the media. After a while, the head-butting between Einhorn and Lehman senior management became quite well known, and by this past summer, even the New York Times was reporting on the story. Obviously there is a picture of him right there in that article online, but I don't recall seeing this picture when I read up on what he had to say then. In my mind's eye, I pictured an old, stodgy man with white hair and a red hankie sticking out of the breast pocket of his blue pinstripe suit. Anyways, suffice it to say, most Lehman Brothers employees over the past year or so came to really hate David Einhorn, and I can't say that I was any different, even once I had accepted much of what he had been saying as true, which I am happy to say happened for me long before it happened for most Lehman employees.

Anwyays so there I am on Tuesday night, I'm flipping through the tv on my way to watch the Mets hopefully blow another game (they won actually, now only one game behind the Phillies in the loss column), and I see the WSOP coverage so I stop for a minute. And before I even know what's going on, there is Lon McEachern introducing David Einhorn at this featured table. And I'll be damned if that guy isn't some little kid. I mean, a young whippersnapper like that is the guy that hurt Lehman shares this year more than any single other individual (other than maybe Lehman CEO Dick Fuld himself, but that's another story)? I watched in amazement, hoping to see him get his child-looking ass busted out on some donkey play just to make myself feel good, but alas it was not meant to be. He was behind and drawing dead on a couple of occasions in this Tuesday night's episode, most notably a hand where he had a flush draw and two middle cards on a raggy-looking flop against Chris Moneymaker, but both times he managed to sniff out the situation and get out with a minimal loss. I may actually have to tune in next week just to see if they'll show me his bustout hand, although my sense is that the likelihood of seeing him again is probably fairly low, and given how boring the tv coverage is these days, I doubt I'll be back. But actually getting to see what a young guy he is -- he is just a kid, really -- was quite an eye-opener. To think that someone who looks like that could see through the opaqueness of Lehman Brothers' books and their strategies so easily, and so long ago at that, is really a telling statement about a lot of things I think. I still think there is a special place in hell for these guys who go around shorting stocks and then talking them down as much as they possibly can after taking a large short position -- probably somewhere on the same level of hell as the Don't Pass bettors at the craps table -- but I guess I have to give the little boy some credit for being able to figure this out and for sticking his neck out there and going public with his convictions long before anyone else in the marketplace was saying boo about Lehman or any of the other large investment banks.

So on to today's topic, which is maybe a simple point but one which I am writing down here because it's something I know I need to focus on better myself in the poker tournaments I play. Arnold Snyder is a big fan of the stop and go, a move which I rarely if ever use in my own tournament play. Snyder basically explains that a preflop allin move from a shortish stack is actually perceived by many larger stacks as a fairly weak move, and one that they are often likely to call with a somewhat wide range of hands. Snyder far and away favors the stop and go, where you just call preflop when you have a shortish stack, and then push allin on the flop no matter what falls.

Now, it's not like the stop and go is some new move that Arnold Snyder has thought up all on his own. Of course it's been written about and talked about and used by successful poker players for years and years. Centuries even, maybe. But, it's not something which I myself have incorporated into my game at all. And I know I need to. Because I've seen several successful tournament players use this ploy on tv to much success, Arnold Snyder believes in it as well, and I personally know at least one or two guys I play with somehwat regularly myself who swear by the stop and go, in the right spot at the right time.

Snyder himself gives a very convincing argument for the stop and go, especially from out of position, essentially arguing that sometimes you are actually "giving free cards" to your big-stacked opponent when you reraise his preflop raise allin and you are not on a particularly large stack. Say you have a hand like pocket Tens or AK, you have 50k in chips late in a large-field mtt where the average stack is more like 100 to 150k. So you're pretty short, and a guy with 200k in chips raises a standard amount -- say to 18k or something -- from middle position, and you're in the small blind. If you push allin now, it will be 32k more for this big stack to call into a pot with 74k in chips in it, assuming 3k-6k blinds at this point in the event, so he is probably going to call with almost any hand that he would have put in that first raise with before the flop. And now the guy is going to have five cards with which to hit his AK or his set of 6s against your TT.

Now think about what would happen if you just flat called his 18k raise preflop. Yet this only leaves you with 32k behind into a pot of 45k. but say the flop comes down Q94 with two to a suit, a fairly standard flop. Now you push allin from the small blind, and even though this player has a nice stack of still around 180k, does he really want to call off another 32k -- more than a sixth of his remaining stack -- with just pocket 6s, or AK? Probably not. And that right there is the strength of the stop and go play. When you push (on just about any flop, mind you), he is likely to lay down most hands in this spot, and your stack will grow from 50k to 92k. That right there is a huge move for you, getting you much closer to average in a spot where you really need to add to your stack pretty desperately, and you did it in a spot where had you pushed allin before the flop, you would have gotten called and given the 66 or AK a much better chance to draw out on you.

As I said, I don't mean to suggest that this is anything earth-shattering at all, as I know it's not, but it is something which I personally do not use nearly enough in my own game. I am much more apt to push in that spot before the flop, get called, and then go to sleep muttering about my bad luck of losing a race or, if I'm playing on pokerstars especially, getting 2-outered at the river to lose to a set. In reality, I can probably increase my chances of survival and of chipping up in spots where I really need to chip up if I raise a little less and call a little more before the flop when I do not hold a big pair, and then just push in more or less blind on any flop that falls. Snyder considers the preflop push here giving up your post-flop utility in a hand, and in his eyes doing so is almost always a mistake. Giving your opponent a chance to fold after the flop where there is very little chance he will fold before the flop is the much smarter, more effective move from a chip utility perspective in many cases.

This is something you can expect to see me do tonight at the final table of the Mookie. For those of you who do not know, tonight is the last night for Waffles to make good on his self-challenge to surpass LJ in annual Mookie winnings, and although Waffles has made a good go of it, in order to be able to catch LJ at all tonight, he is going to need something like 80 people to play in the Mookie. 80 people. It's doable of course, but absent the BBT this is not a number we have seen too many times even for the greatest blogger event of the week. So what I'm hoping to see tonight -- and frankly I would enjoy an 80-person Mookie in its own right probably as much as I would enjoy Waffles having one more longshot of a chance to win his bet -- is as many of you as possible come out to donate your $10 to the Give-Waffles-a-Chance prize pool for the Mookie. Maybe you have never played a blogger event before and have been reading here for a while and have always kicked around the idea. Maybe you've played many times but have kinda gotten away from the blogger events since the last BBT ended. Maybe you think you might miss the first 20 or 30 minutes due to work or whatever but otherwise wouldn't mind playing with your blogger friends tonight. Whatever the situation, I urge you to come out tonight and get that field size up as high as we can to Give Peace Waffles a Chance. As always, the Mookie is on full tilt at 10pm ET, under the "Tournament" and then "Private" tabs, and the password as always is "vegas1". For $11 you can know you made a difference in the life of one of the game's great ambassadors, and the Mookie is basically always guaranteed to bring fun and enjoyment to everyone's life to boot. So please come out if you can. I know I will be there.

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Blogger 1Queens Up1 said...

This is why nothing will ever change in America:

Republican officials said Treasury Secretary Henry Paulson had agreed to demands from critics in both parties to limit the pay packages of executives whose companies would benefit from the proposed bailout. That has been an emotional sticking point in the struggle to win congressional approval of the historic rescue of the financial industry, though the “golden parachute” money involved would be relatively insignificant compared with the huge sums being talked about.

Why are we limiting, not eliminating? I really really really want to run a financial company in the ground so i can have the gov't bail me out AND i still get a hefty fee!

2:35 AM  
Blogger Bayne_S said...

1queens apparently does not understand how difficult it is to find a quality executive capable of running a venerable financial institution to the ground.

4:38 AM  

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