We tried to play as many tournaments as possible. But one day Planet Hollywood cancelled its tourney due to lack of interest. Not a particularly good legacy if the rumors about the WSOP are true. Another day we all withdrew from the Binions 2:00pm when we realized we would make up 80% of the field. The same thing happened at Aria.

But that didn’t stop us from having a great time and playing what tourneys we could find. The M Resort did a good job of attracting good fields. And the locals are still turning out for the Orleans tourneys. I cashed in the Tuscany donkfest, accomplished without a rebuy even. 

Idoru (aka Mike) had been looking for revenge after a somewhat lackluster Biloxi performance in January. He got it. I think he cashed four or five times.

Vegas is definitely now catering to the budget gambler. Registration lines were very long on Sunday, when cheap room specials kicked in. 

Most of us stayed at the Monte Carlo, where they offered a $1.99 breakfast special between midnight and 5:00 am. As a bonus, each breakfast special could be accompanied by its own cheap beer for an added $1.50. The boyz got me my own Colt 45 - with a straw - at about 2:30 one morning. 

This trip we tried to include a couple of cultural outings. I highly recommend stopping by the Chihuly exhibit at Aria. We also enjoyed the exhibition at the Bellagio entitled “Figuratively Speaking: A Survey of the Human Form” featuring works by Renoir, Hockney, Picasso, Degas and more. 

I got in one session at the Venetian’s Omaha hi/lo game. But I could have played there all week. I love that game. Every time I play it, I bump into someone I know. Last time I played it, I ran into Barrister who I had played with in Tunica. This time, I met up with Dr. Will Shead, who wrote this review of ”Check-Raising the Devil” for the Journal of Gambling Issues. With a twinkle in his eye, he claimed he was in Vegas doing “field research.” Um. Yeah. me too. 

There were lots of totally ridiculous moments, of course. I nearly spewed coffee out my nose when Idoru showed up wearing this T-shirt with the infamous 2+2 photo shop work of art.

I also took a fast pass by the Rio to say a quick hello to Otis, Mean Gene, and Flip Chip. It was the last day of the WSOP Championship prior to the November final. The boys looked pretty tired. And I could only see Dr. Pauly and BJ from a distance as they were still hunkered down inside the ropes.

 On one hand, I was a little nostalgic for the old days when I covered the WSOP. On the other hand, I was relieved not to put in the backbreaking hours.

It was great to see everyone. But the sluggish poker scene had us rethinking next year’s meeting venue.  Vegas either has to go through a lot of consolidation to beef up the field sizes — or we might have to consider a venue running a larger tournament event. Of course, it would be hard to pass up our annual picture at Binion’s. But maybe at our advancing ages, that would be a good thing.

Poker has enjoyed a legacy as a big tent game. Man, woman, black, white, off the Mayflower, or “off the boat” — you got to put your money down and get the same seat as anyone else. Recognizing that woman didn’t have the same earning power as men, women’s events with lower buy-ins were added to almost every tournament lineup. Of course, women were always welcome to play any event. Whether women’s events are now archaic is a tired discussion. But the fact remains, poker had a track record for trying to be inclusive. 

 When I first started playing poker before the boom, people would ask me if I was intimidated sitting down in a game because I was a woman. If I ever had any gender insecurities — which I doubt — they were long gone before I started playing poker. As an engineering student in the 70s, I never would have made it. My freshman dorm had 700+ men and 28 women. I always felt comfortable at a poker table.

I have to say, however, that once poker grew in popularity and revenue, advertising agencies did poker a big disservice. All of a sudden, the online sites I played on started swamping me with bikini-clad images. Hey. I get it. Most poker players are guys. And the last thing I want is for the industry to go all “Virginia Slims” on me. But how crass can it get? How much don’t you want me to play?

PokerStars and Full Tilt haven’t been too bad. Although the whole Clonie Gowen/Maxim chapter at Full Tilt was certainly disappointing. And PokerStars — it took you until 2010 to sign Selbst?

I realize a lot of sports have a bimbo marketing factor. At the base end of the spectrum, you have the gals strutting it between boxing rounds. Even the Tour de France features stunning models for the jersey presentations. But are they featured in bikinis or lingerie? Nope. They get to wear the coolest stuff — like these polka dotted dresses. (I’m not much of a dress gal. It’s either a suit or jeans for me. But I am mad for those dresses. I totally want one.)

But I’m beginning to wonder whether there is any sport or any competitive endeavor that aleinates its female participants quite as much as poker does now.

Emma was the first woman elected to the Austin City Council back in 1948. Over the years, her game has attracted its fair share of Texas dignitaries, including a drop in by LBJ. And this isn’t a girls’ night out. It’s all about the cards. After numerous questions from the reporter on the story, Emma told him to “Stop talking. We’re playing poker.” Emma is 98.  You go girl. You can read more about her here.

Some people have a list of pros or celebs they’d like to play poker with. I have enjoyed playing against pros like Robert Williamson III, David Benyamine, Rafe Furst, Surinder Sunar and Chau Giang. But it was more about the game than the players. Up until now, there had been only one person I really wanted to play with. I wanted to play against the billionaire banker Andy Beal and got my wish in 2006.

But recently, my list has grown. Supreme Court nominee Elena Kagan plays poker. Supreme Court Justice Sonia Sotomayor is also a player. I’m thinking this has the makings of a fun game. Granted, I don’t think it would be as soft as the judge’s game in Rounders. I suspect both women can trap. But maybe if I kept the beer and scotch flowing, I’d have a chance.

I also have a new book on my short list to read. Pauly’s long-awaited book, Lost Vegas: The Redneck Riviera, Existentialist Conversations with Strippers and the World Series of Poker, is out there in the universe. I’m saving it for my trip to Vegas in the middle of July. Seems like the perfect read for a boyz trip.

I’m looking forward to the annual pilgrimage. While most of the boyz made it to January’s Biloxi extravaganza, I haven’t seen Joel and wildbill in a long, long time. I’m really looking forward to it.   

Note: Emma Long’s photo by Rebecca Scoggin McEntee

Through 2006, Fargis amassed over $137K in recorded live tournament events. As mostly an online player, that was the just tip of the iceberg.

In the picture, Fargis’ T-Shirt says “Why Work?” But by January 2007, poker had become a drag for Chris and he was looking for something different. In this post, he asked his blog readers for ideas. As you can see, Dr. Pauly suggested opening a bar in Brooklyn called the “Triple Draw.” Since Fargis obviously excelled at risk vs. return decisions, I suggested investment. In his subsequent post, he said he planned to pursue investment/trading as a possible career. Over the years, I lost track of Chris Fargis and his plan — that is until I read this article in the LA Times. Entitled “Trading Firms Put Their Money on Poker Experts,” the article profiles Chris — in his current trading career — and discusses the skill overlap between online poker players and high-speed traders.

I found it funny that I recommended investing to Fargis in 2007. A year later, I would take my own advice and head back to the investment world.

I sill like when my poker and investment worlds collide — as they did recently. I spoke at The MoneyShow in Vegas a few weeks ago. It was a ton of fun. As an investment writer, I don’t get a lot of face-to-face with readers or the people who share my passion for investing. Walking into the MS for the first time reminded me a little of walking into my first major poker tournament. 

In both poker and investing, you put your own money on the line each and every day. And it’s not enough to learn poker or learn to invest. You have to keep learning and growing — because the game constantly changes. There’s something invigorating about a group of people dedicated to honing their craft. I felt that walking into the Gold Strike ballroom back in January 2002. I felt that energy again, walking into Caesars ballroom for the MoneyShow.

My other goal for Vegas was to get my brother to play something other than low limit stud. Matty loves to go to Vegas to play poker, but the Mirage stopped spreading the last of the low limit stud games out there.  So I’m happy to report that Matty successfully negotiated his first live sessions in both limit hold’em and Omaha hi/lo. And even though he played O8 like a total maniac, he outperformed his omaholic sister. Well done, grasshopper.

But thanks to aramfingal, I can die a happy woman.

I’m thinking of a line of T-shirts.

But in reality, investment banks may be less ethical and dumber than sportsbooks — even the mobbed up illegal kind. Or at least, that’s my read of the Goldman Sachs Abacus deal.

The Wager:
In sportsbooks, a fair wager is considered one where the outcome is not rigged. It doesn’t mean there isn’t a favorite — that bias is theoretically removed by the odds or the setting of the line. It is also assumed that each bettor will have equal access to the, somewhat imperfect, information that is germane to the result. A team’s past performance and statistics can be thoroughly researched, injuries are public information, etc.  

In the Abacus case, the SEC’s primary argument is that the initial wager was not fair.

In effect, Goldman Sachs had been asked to set up a portfolio of investments that one specific investor — hedge fund manager John Paulson – wanted to bet against. In fact, they let Paulson hand pick the investments to increase the probability of their failure. But instead of divulging the true nature of the portfolio, Goldman said the portfolio was set up by a separate company of experts, who specifically hand picked the investments to succeed.

In Goldman’s Abacus presentation to customers, found here,  many pages detail how successful the selection company had been at picking winners; none of its rated notes had ever been downgraded. And what’s more, the company’s economic interests were aligned with potential investors; the company bet on these things to win all the time.

Imagine a sportsbook set up a wager on the outcome of two amateur baseball teams. The sportsbook told bettors that the lineup for one team had been hand picked by a group of coaches and managers who knew all about the players. Not only that, teams hand selected by this group had always won. In reality, however, the lineup was selected by the opposing coach — designed to give his team the advantage.

Goldman will argue that they gave bettors/investors the starting lineup and they should have been smart enough to assess the team’s strength on their own. But these investments were not run of the mill. And like amateur players, their strengths and weaknesses were not easy to assess. Goldman obviously believed that investors would have to rely on expert opinion — which is why it spent page after page bestowing the virtues of the experts who had allegedly hand selected and vetted the portfolio.  

Goldman also claims that the selection process was not material and it wasn’t obligated to divulge Paulson’s involvement. This seems disingenuous. Goldman obviously thought the selection process was important enough to detail in their presentations to investors. It believed that the selection process would be a selling point and encourage investors. By its own actions, Goldman lends credence to the argument that the selection process was material. That the company neglected to inform investors of Paulson’s involvement was a material omission.

The Line:
A big bet will move the line on a wager.  In public investments, the same is true. If big investors want to make a large wager, they know they will move the line. Paulson probably could have found a number of public trades to make his wager but he didn’t want to move the line — or have to pay a premium to attract an opposing position. That’s why he went to Goldman. In a private offering, Paulson got the terms he wanted, Goldman fixed the line, and the opposing investors ended up with sub-optimally priced risk.  

While not illegal, Goldman screwed over buy-side investors in this particular deal.  The best explanation for how this played out can be found here.  

The Risk:
Investment banks and sportsbooks play an important roll in investing and wagering; they offer liquidity. Theoretically, by virture of their size and ability to offset risk, they can offer investors/bettors efficiently priced action that they couldn’t otherwise get from small operators.

Every sportsbook works like crazy to manage its risk as it attracts a maximum amount of action. It’s a tough balancing act but one that insures the sportsbook’s continued profitability and longevity. The last thing they want is to end up with an unbalanced position. Their goal is to be outcome neutral.  

Goldman asserts it did not turn a profit on the Abacus deal, as if this were relevant to motive. According to Goldman, it ultimately lost $90 million because it ended up retaining a position in the Abacus deal.  

There are two possibilities to explain Goldman’s folly. Goldman wanted to bet on the security because they believed Paulson was wrong. Or, Goldman couldn’t offload its risk and got stuck holding the bag. That either makes the folks at Goldman piss poor investors or inept at handling risk — neither high praise for an investment bank. There is some evidence, however, that Goldman did derive some secondary benefits from the Abacus deal, detailed here.  

The Irony:
A sportsbook that misleads its customers about the nature of a wager, makes those same customers wager with an unfair betting line, and doesn’t offload its risk, doesn’t stay in business very long.  In fact, I’m sure there are bodies buried in the desert that would testify to that — if they could. 

It surely wouldn’t receive a government bailout of $12 billion and turn around and give its bookies $14 billion in bonuses. 

At work, people hold the investment community in high esteem — certainly higher than my gambling buddies. They think it’s odd and unseemly that I know people who have done time, like my friend Vinnie Procopio. And yet I think guys like Vinnie are more ethical and smarter than many in the investment world.  Their only mistake was where and who they worked for. In Atlantic City, they got arrested. On Wall Street,  they might be lauded for having a prudent business model, based on a track record of ethical deals.  

Vinnie recently got out of county, where he had been sentenced to serve 364 days for his involvement in an illegal sportsbook operation.  If Goldman Sachs were smart, it would hire these guys. It could only help its reputation.

For instance, some of the guys were indicted on charges that they helped offset risk: “Four other alleged bookmakers were charged, not as members of Micali’s ring but for allegedly accepting “layoff bets” from Micali, meaning bets that Micali’s ring initially accepted but that were ultimately viewed as exposing the ring to unacceptably big losses if certain sporting events didn’t go their way. Those four men allegedly agreed to take over the layoff bets, allowing Micali’s ring to better balance its wagers.” 

The case against Goldman Sachs could be protracted. In the end, they could settle and/or beat the rap. After all, what is unethical isn’t always illegal. And for that matter, what is ethical isn’t always legal.

Top picture: The legendary Bob Succi, former sportsbook manager at the Stardust — the man behind the line.

As shocking as Beal’s win was — I think some people would be more shocked to learn that Andy Beal flies coach. He’s not the only billionaire that hates to pay for first class. Apparently IKEA founder, Ingvar Kamprad, also flies coach. An interesting article about frugal billionaires can be found here.     

I know people think my frugality is freakish.  But I don’t get why people pay more than they have to.  Of course, sometimes I go to extrodinary lengths to get a deal.

Last Thursday I walked into a rug store, part of a national franchise. I made small talk with the saleswoman. Then I asked, “Are you about to liquidate the store?”

She looked uncomfortable and asked, “Why would you think that?”

The signs boasted a sale, but there were no liquidation or going-out-of-business signs. The store was filled with inventory.  

“I’ll tell you why I think so, if you tell me if it’s true.”

She confessed it was true. But they weren’t advertising that fact until the Monday after Easter.

I told her I had seen something on craigslist. She quickly answered that they hadn’t posted any of their rug invetory there yet. I said, “Yes. But you posted some of the store fixtures. And no store sells its fixtures unless it is closing shop.

“Are you like the Rain Man of bargain hunting?,” she asked. 

I had been looking for a couple of area rugs and I had been to the store in December. Most of their inventory was the typical nylon crap. But they had a few rugs that were handmade and 100% wool. They weren’t the finest weaves, but they were solid quality.

In a liquidation sale, these would go early. This was the stuff that decorators would feel comfortable buying on spec and house stagers could re-use forever.  

I bought one rug, the cheaper of the two, at a standard 30% off clearance (about 70% off retail). I did that so I could haggle on the rug pictured up top. The saleswoman was reluctant.

“Look,” I said. “No one who walks into the store over the next few weeks will have worked as hard as I did for this. And there is no one who will appreciate what you can do for me more than I will. Trust me. This will be good karma.” She laughed and said, “I am so sick of working fucking retail. I could use some karma.” I got my deal.

Along with my two new rugs, my mother sent me two new pieces of art. One is kind of a folk art painting of me, while the other is a cool collage of me, my father and my paternal grandparents.  

Btw, I’m speaking at The MoneyShow in Vegas in May. I got a notice informing me that they had rooms blocked at Caesars for the event. When I looked at the rates, I was shocked. I think they were higher than retail, averaging about $200/night.  Any nickel slot player could get a better rate.

I booked next door at the Mirage for about half the price. I have more leverage with the MGM Mirage properties since that’s where I tend to play. And since I’m staying a few extra days, I’ll save a few bucks and my company will save a bundle. 

I like when my poker life and investment life intersect. It happens more often than you’d think. For instance, I had a nice time catching up with spaceman a couple of weeks ago. He wrote this very cool article about poker and personal finance at PokerListings.

Happy Birthday Amy,
Chris Ferguson 
P.S. Jesus Loves You

Over the last few weekends, I’ve been spring cleaning.  While I was freelancing, writing Mike’s book, and working at StreetAuthority, my space got away from me. And I felt the need to reclaim some of it. Unfortunately, for me, this meant tackling my ongoing problem with books. Books end up being another one of my many vices.

When I started, my poker bookcase was double stacked. My political/history/finance bookcase was double stacked. My fiction/sci-fi bookcase and auxillary bookshelves were triple stacked.

Stray books could be found in every room. Molly Ivins: A Rebel Life and American Radical: The Life and Times of I. F. Stone sat on my dresser. Just a Geek: Unflinchingly honest tales of the search for life, love, and fulfillment beyond the Starship Enterprise was on my kitchen counter. The Given Day: A Novel was by the piano. The Nine: Inside the Secret World of the Supreme Court was gracing the hallway desk; just one of the four desks in my house. And Cowboys Full: The Story of Poker was on the desk in the guest bedroom — alongside the scripts of Pulp Fiction, The Secretary, and Clerks. These were my “in process books.”

During the purge, I filled four shopping bags full of books, ready for resale to Half Price Books (HPB). Some of the purges were easy. At least a half dozen poker books were unsolicited, sent by publishers looking for reviews. And then there were the duplicates. I’m not sure how I ended up with two copies each of Isaac Asimov’s Robots and Empire and The Happy Isles of Oceania: Paddling the Pacific by Paul Theroux.

But some things took time. Old books had to be searched to see if they were valuable. So I ended up keeping my 1935 copy of “The Class Struggles in France,” written by Karl Marx with an introduction by Frederick Engels. It was printed in the “Union of Soviet Socialist Republics” and still has a decent dust jacket and errata sheet attached. It’s only worth about $50, but it’s kinda cool. 

I was about to toss my 1947 copy of “The Record of American Diplomacy: Documents and Readings in the History of American Foreign Relations,” edited by Ruhl J. Bartlett. But apparently this baby is selling for over $450. I’m sure I bought it in a used book bin somewhere back in the day. The only time I ever shelled out big bucks for books was for a first edition set of the ”Personal Memoirs of Ulysses S. Grant.” (top picture)

I also had to make time for discoveries. For instance, a couple of weeks ago, I was at HPB, trying to score a copy of Sarah Vowell’s Assassination Vacation. I was bummed that I couldn’t find one. When I was cleaning out my bookcases, I found a copy.

I’m not sure what this process will actually accomplish in square footage. And I know it will be short-lived. But it was time.

With tough love, I told him he had three years tops.

For the most part, private equity companies swoop down on companies with low debt, decent cash flow, and a lot of assets. They then issue tons of debt against those assets, collect millions in fees, and dump the debt-ridden company within a few years. Once saddled with debt, even the healthiest businesses struggle and often fail. Not bad for private equity companies - not good for employees.

I was tempted to send my friend Gretchen Morgenson’s article in today’s NYT about the downfall of mobile phone operator Wind Hellas after it was taken over by two private equity firms. One of the firms was Texas Pacific Group (TPG).

If you recall, TPG (along with Apollo Management) was the private equity group that bought out Harrah’s. Last month Harrah’s Chief Executive Gary Loveman said that the company might go public again, possibly by 2013. Of course in 2013, the company has $5.8 billion of its $19 billion of loans coming due. Harrah’s didn’t have most of this debt before the private equity companies bought them in January 2008.  But hey, let the new shareholders worry about that. 

If you’re looking for heart, the investment banks are no better than the private equity firms. Consider that in 2001, Goldman Sachs made $300 million in fees off Greece, selling the country derivatives that effectively hid the amount of debt the country was carrying. Goldman later made even more money selling credit default swaps to its customers, advising them to bet against Greece. Goldman claimed the country’s debt problems were bigger than people knew. Of course Goldman knew — the bank orchestrated the deal that helped Greece hide its indebtedness.

Goldman was pretty good at the shell game.  December 2008 was going to be a horrific month for the company; it was going drag down its fourth quarter earnings. So what did Goldman do? It changed its fiscal year — which effectively allowed it to omit December’s earnings (losses). Merrill Lynch also pulled the same stunt. December never happened. (Picture of Goldman’s CEO and COO from Vanity Fair - also nice article here.)

Lehman Brothers pulled a slight variation of the shell game.  During the bleakest quarters heading into the company’s ultimate demise, it executed some crazy off-balance sheet transactions (Repo 105) days before it would have to report — effectively hiding tens of billions of dollars in non-performing assets. After the reporting period, the company would reverse the transaction.  A nice summary of Lehman’s shell game can be found here.

My managing editor at StreetAuthority was working on an article that was going to feature me. In it, he wrote about my frugality. Any one that knows me, knows I’m not wasteful when it comes to money. I remember when I first told Jen Leo I was taking the job with SA, her first response was, “Why are you getting a job? You never buy anything.”

It’s true that I have only ever bought used cars for cash — and then generally owned them for another ten years. I just can’t make myself spend a lot of money on a depreciating asset. I buy my jeans at second hand stores. It’s good for the local economy, the environment, and my pocket book. And I don’t fill up my gas tank unless I’m sure gasoline prices are about to rise. I watch the energy futures more closely than OPEC. 

Recently, I had the control panel of my wall oven repaired, rather than spend three times as much on a new part (which was difficult to find in stock) or twelve times as much for a new oven. By the way, I totally recommend FixYourBoard.com. They not only replaced the broken elements in the control panel, they replaced known failure-prone elements and resoldered the entire board. They also guaranteed the part for two years — that’s twice as long as the manufacturer’s guarantee.

But contrary to Jen’s assertion, I do buy things I need or truly want. I bought a beautiful new Samsung refrigerator. Granted, my old refrigerator was 20 years old. And I did buy it during a 20% off sale. I also recently bought a Bose® SoundDock® Series II digital music system for iPod® - Silver. Although I did buy it on sale and also used an Amazon gift card.

Yesterday, I paid $5/pound more for fresh caught salmon than for farm raised salmon. I also paid about $2/pound more for bison meat rather than buying ground beef. I did pass on the $21.99/pound goat cheese. But the cheese from the Pure Luck Farm and Dairy is well worth it. Two weeks ago when I was at Central Market, they didn’t have any of Pure Luck’s products on the shelves. There was only a sign that read, “We are feeding the kids right now. We’ll be back soon.” So I guess the new kids (pictured) are weaned — which means spring is here.

Apparently the boss nixed the article that mentioned my frugal ways. He told the editor my lifestyle might give people the impression I was something of “a loser.” Maybe he never read The Millionaire Next Door. I mean I know he is only watching out for me. Not everyone understands the frugal thing. But c’mon. All twelve of my Stock of the Month portfolio holdings - a real money portfolio funded by SA - are up. Some of them are up north of 40%.  And my three closed positions all booked more than 50% annualized returns.  Of course, I’ve been working with a particularly co-operative market. And every good poker player knows a good streak involves some level of luck.

Maybe I should be living a Bernie Madoff or Gordon Gekko lifestyle. Or maybe I should be playing some sophisticated shell game that bankrupts countries and companies. Maybe then, I wouldn’t be such a loser.

Over the years, the success of SXSW has taken a predictable toll. Record producers don’t come into town to sign bands any more. They host label showcases. The venues are so crowded now, a wristband won’t get you in to see the better-known bands.

And of course the one thing all Austinites fear this time of year is the number of people who come in from LA and think our laid back and inexpensive town is “quaint and cool.” Some will actually decide to move here.  Andy Roddick’s $4 million house is up for sale, and I’m sure it’ll get snapped up during the invasion. Of course once here, they’ll bitch about the fact that they can’t find a limo or that mere residents can actually get into their favorite upscale ”eatery” wearing shorts and flip flops.

Aside from the cult of personality factor, SXSW still has its benefits — although it is a little harder for me to wallow in it with a day job.  But I’ll try to get down to El Sol y La Luna for the Tortilla Factory’s showcase. In the 70s, this funky Tejano and Salsa band was fronted by Tony “Ham” Guerrero.

The band got back together a few years ago to record All That Jazz, which won a Grammy nomination.  And although Tony’s health won’t allow him to play these days, he is supervising the band’s comeback with his kids, Laura and Alfredo, at the helm.  This is the real deal — 16-piece band and all.

I’ll also try to crash a panel at the SXSW Film Festival entitled “Writing a Screenplay: Consider the Source” focusing on adaptations. I find it rather odd that this was the only panel for writers - but very glad they chose this particular panel. Of course the panel with the best title is on the music side. “Welcome to the Music Business — You’re Fucked.”

It ain’t the old days. But the weather will be warm and the margaritas will be cold. Although “undiscovered” talent will be a little on light side, talent will still be SXSW’s strong suit. And I think I’ll be fine as long as I dodge the Four Seasons for the week.