"Gamble, drink and die"

[Minn. Fatz]

According to a recent poll, two out of five people in our state said they were worse off today than they were a year ago. The other three hadn't opened their brokerage statements yet.
Just to put our cards on the table, we are worse off than we were last year. We are also worse off than we were two, three, four and five years ago. The fruits of six years of careful, conservative, diversified investing have been wiped out in the last twelve months. More and more it seems that the biggest difference between Las Vegas and Wall Street is that Las Vegas is regulated. Surely we could have pushed all that money through some full-pay Jacks or Better machine and wound up just as well off, most likely with a raft of casino comps into the bargain. And as reluctant as I might be to inject the mundane subject of electoral politics into what should be a neutral forum about the more elevated activities we enjoy, I have to say that this year, and probably for many years to come, I will not be voting for any candidate from the party currently occupying the White House for town dog-f***ing-catcher. And yes, you may quote me.
Lately I can't seem to fight the feeling that Tom Petters is somehow right: we're all playing a losing game, there's no real way to get ahead, and the best way to deal with the world as it is might just be to "gamble, drink and die."
Before we decide to leave Las Vegas, we should consider a few possibilities: 1) we might, indeed, be playing a losing game; b) on the other hand, we could be experiencing some extreme, though predictable, variance; and iii) (since all successful economists, though not many honest gamblers, have at least three hands) there is the vanishingly small possibility that we've been playing the game wrong.
How should an experienced, savvy VP player treat each of these three possibilities?
1) If you know you're playing a losing game, you have two choices. Change the game you're playing; or admit that you're playing it because you want to play it and set aside any pipe dreams you might have about winning. If there aren't any winning games at your favorite casino, get a new favorite casino or stop playing altogether. If you can't tear yourself away from the place, you'd best cut back on the amount of money you run through the machines.
b) If you think, or have reason to believe, you're playing a game that will be a long-term winner and it's just a variance pocket that's swallowing up your roll, you again have two choices. Tough it out and wait for the winners to hit, as you think, or have reason to believe, they will; or decide you've reached your limit (a limit you should have decided on before you first sat down to play) and back off.
iii) If, on the proverbial third hand, you think, or have reason to believe, you're playing the game wrong, you have two more choices. Get better, learn more, make some different moves; or admit you don't have the ability, patience or discipline you thought you could have had, and get out.
Another important difference between Vegas and Wall Street is that the "machines" on Wall Street don't have convenient window glasses that can tell you their expected returns. So we have drawn from each of the three solutions above. We've resolved not to worry too much about the paper profits that have vanished, as they were never ours to begin with and chasing after future gains or crying about past losses are both dangerous illusions. We're also hanging tight with most of our bets in the hopes the variance will turn our way in years to come. But we have taken a significant number of chips off the table and are moving them to hedge some of our bets.
We're still better off than a lot of people materially, and at least as well off as any who have good health, caring family and a happy home.
So our advice is to gamble and drink, by all means, but only in moderation; and to put the other out of your mind for as long as possible.

[EDC1977]

Good analogies M.Fatz! Death is inevitable, all goes according to how well you enjoy your life before it ends. Playing the market like playing the variances will get you or give you. Luck does have a lot to do with it but at least you have an idea of ER with a VP machine. Wall st. would never give such an estimate. Whether it's a FP machine or a hot stock or commodity. Use of better judgement should provide you with desired results. As a buddy of mine at work says to me,"lifes too short to give yourself ulcers!"
                           Amen to that brother!

[shadowman]

As much as I hate to get into politics I don't think the party of the current president has much to do with the situation. Both parties have had a part in the current problems (and, of course, are quick to blame to the other party). These days it's become kind of a lose-lose situation.
 
I like your analogy to variance. Assuming the efforts by many nations to shore up the financial situation are successful, then it's likely the gains we saw yesterday could continue and we will eventually get back to where we were. I've had big losing streaks at VP before and, so far, I've always recouped them and continued to profit over the long term. The same has held true for my investments. So, I use the same philosophy with my investments ... stay the course. I guess I fall into 2) above.

[oej719]

A Random Walk Down Wall Street.
Patterns play a big role in wall street as in vp.??????
No No No.
Many need to be put in the "pen" for life for the fraud that has been committed with the money they were entrusted with.
Politicians as well as corporate brass need to be punished swiftly and severly, or else it will happen again and again.
I agree I too will vote against all incumbents.
No one seems to have integrity anymore.

[EDC1977]

Whether it be mortgages or banks, why ever would you want to bail them out? Bankers like borrowers sign on dotted lines and carry responsibilities with them. US general public shouldn't be burdened with poor investment choices by others, let alone their present or future president. Can you say junk bonds? Too much politics for me today. Going back to nap! Harumph.

[scorpio2]

oh oh,market went down again today,time to throw another billion,of the casinos,i mean taxpayers money on the fire!

[oej719]

Lou Dobbs for President.
I'm moving to mexico amigo. Open up myself a taco stand and sell fake hotdogs.

[bigsteve5273@yahoo.c]

Not variance but rampant greed, no CEO of any corporation assumes any responsibility for any negative attribute, falsifying of credit applications abetted  by the lenders to borrow into the American dream at unaffordable rates, bailing out Wall Street, banks, and the aforementioned home owners and allowing the titans of commerce, finance and industry that birthed the economic mess to remain in power and authority at the taxpayer expense.  Welcome to Wall Street where the profits are private and the losses are the taxpayers problem.  So where do we sign up for the free $440k spa treatments? This  deck of cards  is definitely stacked and not in our favor.    Nevertheless, since my employer matches my 401 k contributions I have no choice but continue to contribute to the mayhem as they will not donate matching cash to my personal savings account.   And why not you might ask?  Answer: It wouldn't automatically enrich the brilliant financial giants that lobbied Congress to pass the 401K bill.   This places me reluctantly in option "B" for the short term with the guaranteed option to invest in more VP based on the lack of future performance of Wall Street and Congress that will no doubt meet my expectations.    

[oej719]

Load up on the ammo big steve. The end is near. We shall start anew.

[cddenver]

More and more it seems that the biggest difference between Las Vegas and Wall Street is that Las Vegas is regulated. Surely we could have pushed all that money through some full-pay Jacks or Better machine and wound up just as well off, most likely with a raft of casino comps into the bargain. And as reluctant as I might be to inject the mundane subject of electoral politics into what should be a neutral forum about the more elevated activities we enjoy, I have to say that this year, and probably for many years to come, I will not be voting for any candidate from the party currently occupying the White House for town dog-f***ing-catcher. And yes, you may quote me.
We're still better off than a lot of people materially, and at least as well off as any who have good health, caring family and a happy home.
I agree with most of what you said in your nice post, but I did have a couple of comments -
 
Hard to find any industries that AREN'T regulated to some degree.  The problem, I think, is loopholes.  A few of those spread here and there through basically good regulations effectively negate the regulations.  More than the people, the system itself is to blame (special interests, lobbyists).   Like a football coach, the occupant of the White House at any given time tends to get too much credit when times are good, and too much of the blame when things go south.  As far as monetary shenanigans go, Congress has much more control of that than the president.  If a Congresscritter has a choice between doing something responsible (not spending money we don't have) and losing votes, or spending money now to get re-elected and leaving the paying part of the process to others in the future...well, that's a no-brainer, isn't it?  Bread and circuses.
 
With all that's going on here now, we're much better off than most places in the world.  A few years ago I spent a couple of weeks in the Russian Federation, and you wouldn't believe what the average person has to deal with daily over there.   Things that would have a revolution going here inside of a week.   While there, I was reading a paper one day and the headline story was about all of the illegal immigration to the Russian republics from places that are even worse off, which really made me think.  The first thing I did when I got back here was to kneel down and kiss the ground - yes, indeedy.