Hey everyone, this is Marty Mathis here writing my first guest article for Upswing Poker. You might know me better as TheLipoFund on Pokerstars, where I have been a regular in tournaments since 2008.
While I have no direct involvement with Upswing, I am close friends with the guys behind the project, and I’m pretty stoked to be able to write articles for them. I really believe in this product, and the ideas supporting it.
In the summer of 2012 I found myself in the depths of my biggest downswing.
As faith would have it, I was reconnected for a weekend with long-time friend Doug, and met Fees for the first time, while we all stayed with a mutual friend in Tijuana.
Having spent just a weekend around these guys and bouncing ideas, I was able to turn things around, leading to my best year ever in 2013.
I am more than happy to provide my personal testimonial, certain that these guys know their stuff very well, and can help you take your game to the next level.
Economics and Poker
Before poker, I was an Economics major, and to this day it still shapes the way I think about all situations. You never really stop being an economist in spirit.
So for my first article, I thought I’d write about something very basic, yet often overlooked within the poker world.
Its no secret that there are a lot of costs to playing poker. The more you play, the longer you play, and the better you become, the more these costs seem to increase.
If you were to ask poker players about costs, the most common answers you would get are: buyins, rake, software, training sites, coaching, (and then transportation and lodging if we are talking about live).
Yet nobody seems to talk or think about one of the biggest costs every poker player faces: opportunity cost. In economics, opportunity cost is defined as: “the loss of potential gain from other alternatives when one alternative is chosen.”
So what exactly does this mean, and how can we apply this to poker? Let’s take a look at a few hypothetical examples.
Example 1: Deciding Which Games to Play
- Scenario A: You can play a $1000 buy in live tournament where your expected ROI is 60%
- Scenario B: You can play $5000 worth of buy ins in online tournaments where your expected ROI is 20%
In this example, your EV in scenario A is $600, while your EV in scenario B is $1000. Your opportunity cost in this situation by choosing A > B would be $400. Ouch.
Example 2: To Grind or Not to Grind…That is the Question
- Scenario A: You want to play Call of Duty for 3 hours
- Scenario B: You are able to sit in a good 2/5 game where your hourly has been $100 for the last year.
In this example, your EV in situation A is 0. Your EV in situation B is $300. Your opportunity cost in choosing A > B in this case would be $300. Ouch again.
Example 3: Play Versus Study
- Scenario A: You can grind $3000 in buyins in 6 hours (with the same 10% ROI you had all of last year, and will maintain for the next 300 hypothetical days)
- Scenario B: You can spend 6 hours studying and increase your next 300 day’s ROI by 1%
While this example is a bit more complicated, and certainly more theoretical, what I want to do is illustrate an important point.
In scenario A, our EV is $300. In scenario B, the added value is $900. The opportunity cost of choosing A > B in this case is $600 (exactly 2x what we would make by playing that one day instead of devoting time to studying).
I also personally believe that you can improve by much more than 1% by putting hours in off the tables with the right resources as well.
This wraps it up for my first article for Upswing Poker. I hope you guys enjoyed it and were able to learn something. Remember to keep opportunity cost in mind when evaluating options.
Your time and money are both scarce resources, and we don’t want you using them in the wrong place. There’s more to poker than being good at cards, at the end of the day, it comes down to being able to make the right decisions.