Speaker 1: Pushkin the Risky Business listeners. Nate and I are busy
Speaker 1: this week at a different poker tournament, but since the
Speaker 1: NBA is back in season, we wanted to reshare an
Speaker 1: interview that we did on the podcast last year that
Speaker 1: both of us really enjoyed.
Speaker 2: We talked to friend of the pod, Darryl Morey, who
Speaker 2: was the president of basketball operations for the Philadelphia seventy
Speaker 2: six Ers and one of the truly og statnerds that
Speaker 2: made it big and professional sports.
Speaker 1: Yeah, we talked about the seventy six Ers strategy for
Speaker 1: their championship run last year, and we talked in general
Speaker 1: about what you need to do to build a championship team.
Speaker 3: Yeah.
Speaker 2: I look six Ers have made some further high risk bets.
Speaker 2: They directed VJ. Edgecombe, who is one of the brighton
Speaker 2: stars in the NBA. I think things looking a little
Speaker 2: better overall for the franchise. I'm getting the interview with Darryl,
Speaker 2: but like we think you'll get a lot of insight.
Speaker 1: Out of this. Yeah. We've also both played poker with Darryl,
Speaker 1: so we recapped some tournament play, including the absolutely horrific
Speaker 1: summer I had at the World Series last year. Anyway,
Speaker 1: we hope you'll enjoy this. I'm really excited for this conversation.
Speaker 1: Nate and I have both known Darren for a while.
Speaker 3: And Aaron, I said, Darryl, he said, he said, there,
Speaker 3: let's let's see. Let's good to I.
Speaker 2: Use a replay challenge.
Speaker 3: I thought, I thought you were doing really well, Maureene
Speaker 3: and I and I fucked it all up. I'm excited
Speaker 3: to be on because you guys are all about decision making.
Speaker 3: That's the only thing I do. So I'm on. I'm
Speaker 3: on twenty twenty two years. I think. I think that's right. Yeah,
Speaker 3: of just making this for teams, so for people.
Speaker 2: Who don't know you are a true Ravarian to use
Speaker 2: a term from the book, cald like you even play.
Speaker 2: I mean, you're really competitive and you like analytics, but
Speaker 2: you really want to win.
Speaker 3: Yeah, exactly exactly.
Speaker 1: I think I think that's a motivation that we can
Speaker 1: we can all relate to.
Speaker 3: It's funny because of you. Thank you. Sorry, no no.
Speaker 1: I was giving a talk in Miami at uh at
Speaker 1: a conference where where there were a lot of people
Speaker 1: who were very into analytics, and we were talking about,
Speaker 1: you know, different strategies and all this, and I was
Speaker 1: like you know what, but like the bottom line is,
Speaker 1: like I love poker, but like I want to fucking win,
Speaker 1: right you guys.
Speaker 3: That congrats on the bracelet. You're you're You're one up
Speaker 3: on Nate as far as I know on zero.
Speaker 1: So it's thank you so much, Daryl.
Speaker 2: Dear so, I've played Poker Institute two or three times
Speaker 2: or something. Darryl, I'm just gonna tell people has very
Speaker 2: bad chip etiquette. You're supposed to stack your chips and
Speaker 2: miles of twenty twenty. Absolutely, if you don't do that,
Speaker 2: that's actually kind of a disadvance of the players. I
Speaker 2: can't see a many chips you have.
Speaker 1: Those assets. Daryl. I like you so much.
Speaker 3: Don't know totally.
Speaker 2: Like if a player is seen as good for the game,
Speaker 2: there might be less requests.
Speaker 3: No, I uh, Sadly, I haven't put the time into poker,
Speaker 3: and I get invited to a lot of games and
Speaker 3: I'm not sure why. Maybe because I don't win very often.
Speaker 3: So yeah, I will say though, Maria, you're you're a pro.
Speaker 3: So it's Nate. I try to at least let my ego.
Speaker 3: Given the fact that I don't win poker a lot,
Speaker 3: I handle it by pointing out that I'm usually playing
Speaker 3: with two or three pros and it doesn't seem very fair.
Speaker 1: If you guys, absolutely not fair, And I promise I'll
Speaker 1: be nice to you if you let me play.
Speaker 3: You definitely want me in your game area, that's sure.
Speaker 2: You are very aggressive.
Speaker 3: Do you use.
Speaker 2: Game theory in any way in decision making?
Speaker 3: Yeah? So, I mean probably the easiest one to talk
Speaker 3: through is like the two for one is a pretty
Speaker 3: easy sort of game theory problem. No one's really gotten
Speaker 3: to the extreme game theory, but it's coming. It's definitely coming.
Speaker 3: So two for one. Just for your audience, there's a
Speaker 3: twenty four second shot clock in the NBA. If you
Speaker 3: have the ball, let's say forty seconds or thirty five
Speaker 3: to forty seconds. You can either run your normal offense
Speaker 3: and get a shot in twenty seconds and now there's
Speaker 3: fifteen remaining, so you get one shot and they get
Speaker 3: one shot, and or you can take a shot quickly
Speaker 3: and then the other team only it's went for seconds,
Speaker 3: so you'll get the ball back. Well, it turns out
Speaker 3: in thousands of thousands of trials at every level of basketball,
Speaker 3: this is going to shock your audience, which I'm sure
Speaker 3: is pretty sophisticated. Two shots are better than one shot.
Speaker 3: I know, I know that will surprise people, but even
Speaker 3: even even even materially worse, two shots are better than
Speaker 3: one shot. There are some exceptions in the fourth quarter
Speaker 3: and things like that, but but in the first three
Speaker 3: quarters it's pretty straightforward. Well, obviously, if the other team says, okay,
Speaker 3: I'm gonna shoot such that I force you into the
Speaker 3: two for one, the other side isn't just this blod
Speaker 3: you know, undynamic opponent. They can then shoot even faster,
Speaker 3: faster back at you. In fact, the Utah Jazz when
Speaker 3: Joey Sloan was there, would do this more than any
Speaker 3: team that I can recall. And then so now there's
Speaker 3: there's a whole set of other strategies that if they
Speaker 3: somehow manipulate the clock better than you, you can then
Speaker 3: regenerate the two for one, like fouling them or being
Speaker 3: super aggressive to speed up their offense. There's a whole
Speaker 3: set of things. So that's just one off the top. Obviously,
Speaker 3: there's game theory and in in game in terms of
Speaker 3: like how do you react to you know, they put
Speaker 3: five out shooting lineups on the floor, how do you
Speaker 3: guard that things.
Speaker 1: Like that, So, and what about when you're making roster decisions,
Speaker 1: when you're when you're thinking about trading, and when you
Speaker 1: actually have to think about yourself as one player in
Speaker 1: a multiplayer game because there are other yous out there
Speaker 1: who are responsible for other teams who are going to
Speaker 1: be making different moves and responding to you. So how
Speaker 1: do you think about it off the court in that
Speaker 1: kind of that metagame?
Speaker 3: That's right, And it's a heavily repeating game because you know,
Speaker 3: it's the same thirty teams. What's really interesting is it's
Speaker 3: a heavily repeating game, but they can replace the key
Speaker 3: decision maker, so it's actually a repeating game at the
Speaker 3: ownership level more than it is at my level where
Speaker 3: people can get fired. So there have been such sort
Speaker 3: of these famous examples of people, you know, making future
Speaker 3: promises or things like that that they then try to
Speaker 3: duck out of and things like that. So, so yeah,
Speaker 3: we're in a repeating game that can work to advantage
Speaker 3: if you treated as such. Again, your audience probably probably
Speaker 3: pretty familiar with like what non repeating or repeating game
Speaker 3: type differences.
Speaker 2: So so NBA teams place an extremely high premium on
Speaker 2: superstar talent, especially in the short term. You know, the
Speaker 2: New York Knicks what they give up for Bridges like
Speaker 2: four or five first round picks and he's a good player,
Speaker 2: but probably the third best player on a contending team.
Speaker 2: Are gms too short term focused because of the incentive issue,
Speaker 2: or are like analytics nerds doing the math wrong and say, actually,
Speaker 2: these draft picks are not that valuable and superstars are
Speaker 2: very valuable, because if you run it through some model,
Speaker 2: it's like, okay, well, the draft picks worth like, you know,
Speaker 2: twenty five million dollars a year in excess returns, and
Speaker 2: Bridges is underpaid by ten million, And I don't know,
Speaker 2: you know what I'm saying.
Speaker 3: Yeah, I think teams are basically wrong at both extremes.
Speaker 3: So they're both not aggressively long term enough. You probably
Speaker 3: like if you actually run the math and you just
Speaker 3: say that you're optimizing you know p you guys talked
Speaker 3: about P doom on your list of the PE Championship
Speaker 3: over three years, if you actually were just optimizing that variable,
Speaker 3: and I can promise you no team actually does do that. Really,
Speaker 3: like twenty something like twenty four of the team should
Speaker 3: be fully rebuilding just long term every year, because if
Speaker 3: you don't have a top five player, your odds of
Speaker 3: PE championship are extremely low. So it's so I would say,
Speaker 3: you know, that's sort of the first thing. The second thing,
Speaker 3: I just just wanted to set up the for people
Speaker 3: to quite understand why the superstars are so important and
Speaker 3: why it's important to sort of save your assets for
Speaker 3: those moves. I think the easiest way I describe it
Speaker 3: as take show Hao Tani, you know the best hitter
Speaker 3: in baseball. Now, when show Heo Tany hits a home
Speaker 3: run against the Mets, he then has to wait eight
Speaker 3: more times before he gets to hit again. Basketball is
Speaker 3: like show Heyo Tany. He comes on the floor, hits
Speaker 3: a three, and then when he comes on the floor
Speaker 3: again and he goes like, I'm still the best player,
Speaker 3: so I'm shooting again. So just imagine show Heo Tony
Speaker 3: being able to hit every single time with Sho Heo
Speaker 3: Tiny's on the base. So that's what you can do
Speaker 3: in bastball. It's actually gotten worse lately, and this will
Speaker 3: be a little bit for the NBA nerds, But because
Speaker 3: a lot of these players who are so great can
Speaker 3: only be guarded by switching pick and roll. So pick
Speaker 3: and roll is one of the staples of our sport. Basically,
Speaker 3: someone knocks your man off from guarding you. It's pretty simple.
Speaker 3: The easiest way to guard that, but one that hadn't
Speaker 3: been used because you can end up with seven feet
Speaker 3: people on six foot people is you just switch the
Speaker 3: screen and that the person who gets hit stays with
Speaker 3: the guy that they were hit on, and the other
Speaker 3: person switches. So the smart NBA players, you know, see
Speaker 3: that now, and they they can basically screen and decide
Speaker 3: who guards them. So now imagine show, hey, Tony not
Speaker 3: only bats every time he's up, he gets to select
Speaker 3: the pitcher on the other team, he gets to go
Speaker 3: against every time down the floor. So and now you
Speaker 3: understand why you know, someone like Lebron James can at
Speaker 3: his peak be worth thirty, like close to thirty wins
Speaker 3: on eighty two games, like an insane impact that is
Speaker 3: not even closely replicated in any other sport. So back
Speaker 3: back to original question, Nate, which now I feel like
Speaker 3: I've gone far afield, But it's a podcast. The entire
Speaker 3: is that how it works? Is that how works it is?
Speaker 2: It is?
Speaker 3: Yeah? Yeah, that did I answer your original question. I
Speaker 3: feel like I.
Speaker 2: Didn't, well, because you're famous for having this kind of
Speaker 2: in fantasy basically call the stars and scrubs yep approach,
Speaker 2: Like not to denigrate the back half of the current
Speaker 2: seventy six ers roster, but like they're all they're all
Speaker 2: a minimum. Salaries are just barely above minimum. Is that
Speaker 2: partly because you think that you can actually get the
Speaker 2: average talent instead of replacement level talent.
Speaker 3: Yeah, so I think that becomes a linear this is
Speaker 3: the this is the geek podcast, so I can geek
Speaker 3: out of it. It becomes a linear It becomes a
Speaker 3: linear programming problem. So the most efficient spending in the
Speaker 3: league are on minimums and draft picks who are playing
Speaker 3: above their above their weight, essentially where you can they
Speaker 3: can be worth double or triple while you're paying them.
Speaker 3: The problem is you can only put about eight players
Speaker 3: on the floor, so you can't actually fully capture that efficiency.
Speaker 3: Like if I could put sixty draft picks or minimum
Speaker 3: players that I've you know, carefully selected that are worth
Speaker 3: more than I'm paying them, I could, and I could
Speaker 3: do that, I could win the game. But unfortunately you're
Speaker 3: only allowed to put five on the FLOORI ADA time,
Speaker 3: and only really eight even play, usually especially in a
Speaker 3: playoff series. So when you look at the how do
Speaker 3: you like generate the most wins? Even a player who
Speaker 3: is just worth his salary, that's highly paid, is actually
Speaker 3: more important than these players who are worth double or
Speaker 3: triple worth. They're paid at the minimum. Then on top
Speaker 3: of that, because of the mac salary, often the top
Speaker 3: player you have is not only paid the most, but
Speaker 3: also worth quite a bit more than what you're paying
Speaker 3: them because of the dynamics I said before, which is
Speaker 3: so yes, I really really love good players and I
Speaker 3: can't get enough, and people talk about it, but the
Speaker 3: reality is, like USA basketball, what works? I mean, you know,
Speaker 3: if you get lots of highly skilled basketball players together,
Speaker 3: it generally works really well.
Speaker 1: How do you factor in kind of the uncertainty factor
Speaker 1: when you're in a game of individuals and champions, right
Speaker 1: when you're dealing with people who are superstars. How does
Speaker 1: your thinking work or do you just kind of not
Speaker 1: even think about it in terms of injury and that
Speaker 1: risk probability? Where right? If you actually, like if you
Speaker 1: invest everything in one superstar and like game one, shit happens, Like,
Speaker 1: how do you think about that.
Speaker 2: Because the superstar happens to be injury prone hypothetically hypothetical.
Speaker 3: Yeah, it's very analogous to the starting pitcher issue that
Speaker 3: baseball teams have. But just multiply it by ten again. Again,
Speaker 3: if we were trying to just be the fifth best team,
Speaker 3: then it would become a much harder problem because then
Speaker 3: the trade offs of injured superstar comes in. But because
Speaker 3: you're trying to be the best of thirty, you have
Speaker 3: to buy risk all over the place. And it's really
Speaker 3: just like what risk are you buying? Are you buying
Speaker 3: risks that they're not good enough, You're buying risks that
Speaker 3: they're bad people? And right off the court, are you
Speaker 3: buying risks that they're injured all the time, or are
Speaker 3: you buying risks that they're shot, might might fall apart?
Speaker 3: Like what what risk are you buying? Because if if
Speaker 3: you're not buying risks, you're not going to win, right
Speaker 3: you have, like beating the SMP by three to five
Speaker 3: percent is not winning you the title. So I tend
Speaker 3: to like buying injury risk because when if if it
Speaker 3: all hits together, you have a team that can win,
Speaker 3: I'll take I'll take that over a player who's twenty
Speaker 3: percent worse but available all the time. And I'm pretty
Speaker 3: sure the math depends out on that.
Speaker 2: You know, I tried that for my fantasy basketball league
Speaker 2: last year. I had Embiid, I had Persius, I had
Speaker 2: John Morant right Cade Cunningham, all these injury risks, and
Speaker 2: it totally felt in his face I was the worst
Speaker 2: team in the league so far.
Speaker 3: Because I can't believe, like you're arguing with the anecdote, Date,
Speaker 3: I can't can't believe it. Well, Nate, what has happened?
Speaker 1: You read Nate's book on the Edge, and and we
Speaker 1: talked about this on the podcast. But Nate bet over
Speaker 1: a million dollars on sports for for research in one year,
Speaker 1: and Nate, can you remind me how much you ended
Speaker 1: up winning at.
Speaker 2: One point eight million dollars on the NBA and this
Speaker 2: is not.
Speaker 1: He bet. He bet one point eight and how much
Speaker 1: did you win?
Speaker 2: Five k? So if you do the math, that roughly
Speaker 2: equates to per hour? Do you need to like working
Speaker 2: at KFCU after taxes and even before taxes?
Speaker 3: Yeah, Maria, how are your poker winning? Since you're getting
Speaker 3: on Nate for his UH for his UH sports wagery.
Speaker 3: They're good. They're good per hour. You're looking better than night. Okay,
Speaker 3: that's good, Yes they were, They're better than Nate.
Speaker 1: I had a horrible summer at the World Series during
Speaker 1: the Summer Series and was down over one hundred k,
Speaker 1: which is not good. And then went to EPT Barcelona
Speaker 1: where I had a score for almost one hundred and
Speaker 1: forty thousand, which put me in the black for the year,
Speaker 1: and then went on to you know when when the
Speaker 1: bracelet last week, have an eighth place finish in another
Speaker 1: bracelet event, so and I have a few other deep runs.
Speaker 1: So now I'm now I'm doing more than a five
Speaker 1: K in the black to be fair. To be fair,
Speaker 1: I don't think I've had one point eight million dollars
Speaker 1: in poker buy ins in my entire history of playing
Speaker 1: poker over the last five and a half years, however
Speaker 1: long I've been playing.
Speaker 3: So I'm just actually running a long con on poker
Speaker 3: on Nate. So we're going to do it.
Speaker 1: You're a hustler, Dearly.
Speaker 3: We're doing like we've done like ten events together, where
Speaker 3: he sees how aggressive I am, and then I'll just
Speaker 3: tighten up when he when he's shoving on me one
Speaker 3: of these times.
Speaker 2: Speaking of all in, you had a very aggressive strategy
Speaker 2: this summer where you cleared out all your salary cap
Speaker 2: space and then you traded for is a sign and trade.
Speaker 2: You just signed him out right.
Speaker 3: Just signed out right, Yeah, which is rare, super rare.
Speaker 2: Signed out right, which is rare. The superstar, our superstar
Speaker 2: adjacent player named Paul George. He's a two way player,
Speaker 2: superstar player.
Speaker 3: Top top, you know, he's top in the league.
Speaker 2: Come on, he's a very good player, Paul George, who
Speaker 2: compliments your existing roster. Well, I mean, did you think
Speaker 2: you had a reasonable chance of I want to get
Speaker 2: you in a tampering situation? What was Plan B if
Speaker 2: Paul George hadn't become available.
Speaker 3: Yeah, we didn't love Plan B. Well, to be to
Speaker 3: be clear, when we started off on that plan, there
Speaker 3: were several plan as they just you know there, you know,
Speaker 3: they sort of faded their A one, A two, A
Speaker 3: three or four, But they faded over time, as you know,
Speaker 3: different things happened, different trades, different happiness with team, things
Speaker 3: like that. We felt quite confident this was our best strategy,
Speaker 3: but I would say it's not to be recommended. I
Speaker 3: really don't think people have tried to like write, oh,
Speaker 3: this is like a new way to do things. I
Speaker 3: really don't think. So we we given our team, given
Speaker 3: how our contracts laid out when I came to Philly
Speaker 3: into twenty twenty, this we thought was the right approach.
Speaker 3: But it could have we would have been doing what
Speaker 3: I was talking about, like sort of a waiting move
Speaker 3: again if we were into Plan B, where we were
Speaker 3: doing moves that could be flexible down the road if
Speaker 3: the you know, the next Paul George became available. But
Speaker 3: this one, obviously there's just any move because you know, again,
Speaker 3: only one team wins. So the math is horrible. But
Speaker 3: we ended up sort of on the We ended up
Speaker 3: like we had sort of Maria's arc there. We had
Speaker 3: a last season was sort of our you know, we
Speaker 3: lost whatever we didn't we didn't have a great year,
Speaker 3: and then you know then we you know, sort of
Speaker 3: got the front office bracelet and that we were we
Speaker 3: hit on that sort of high end of what we
Speaker 3: were hoping to do this summer.
Speaker 1: We'll be back right after this.
Speaker 2: What are the incentives like for regular season versus maximizing
Speaker 2: championship potential? So you have a undoubted superstar Joel Embiid
Speaker 2: And you listen to all the NBA podcasts and they're like,
Speaker 2: we think that Joel embiid Is should rest more in
Speaker 2: the regular season. I mean, do you a do you
Speaker 2: have a plan and be philosophically, what are you trying
Speaker 2: to maximize? Because if you're bringing your thirteen year old
Speaker 2: daughter to the six game and buy some nice seats
Speaker 2: and and it's who's your backup, it's on Mobamba, who's
Speaker 2: your you know drummer? Come on, man, I mean you know, look,
Speaker 2: it's a drop off. I'd say excitement and right now,
Speaker 2: drop off.
Speaker 3: He keeps trying to do things like Joel in the preseason,
Speaker 3: which has had mixed mixed results. But we love we
Speaker 3: love Andre. He's definitely gonna buffet when Joel's out. Look,
Speaker 3: I mean, we definitely optimizing for the postseason. A lot
Speaker 3: of the analysis you see out there aren't isn't very
Speaker 3: well structured. They they do all these hyper correlated analysis, like, oh,
Speaker 3: teams in the top four, the ones that win, you know, well, yeah,
Speaker 3: if you happen to get if the Warriors had gone
Speaker 3: through a year when they had Kevin Durant where everyone
Speaker 3: was hurt, but then they're healthy for the postseason. I'm
Speaker 3: pretty sure they're going to make the finals or win
Speaker 3: it that year, so you know it for us, it's like,
Speaker 3: if there's one guiding principle, it's just it's the players stupid,
Speaker 3: Like it's just get the best players. And the analysis
Speaker 3: I talked about before of Shoho Tani it gets even
Speaker 3: more pronounced in the playoffs because players go from playing
Speaker 3: thirty to thirty five minutes to forty to forty five minutes.
Speaker 3: Rotations shrink, so all the impacts of star players actually
Speaker 3: again goes up. Superstar players are also the player Everyone
Speaker 3: gets worse in the playoffs. When I say everyone, I
Speaker 3: mean on average everyone some some get better, but in
Speaker 3: general everyone gets worse as the competition level goes up.
Speaker 3: But superstars drop the least, so they get they they
Speaker 3: don't fall as much as pretty much everyone else.
Speaker 2: So and there's not much advantage to I mean, if
Speaker 2: you start as a seven seed, then it's not actually
Speaker 2: that harmful, right.
Speaker 3: Seven has become a little more harmful because the plan,
Speaker 3: oh you're in the plane, yeah, so six six is
Speaker 3: fine because yes, you know in game series where you're
Speaker 3: one more on the one more on the road it
Speaker 3: turns out to be not I think that's a pretty
Speaker 3: small swing in percentage of think it's like two to
Speaker 3: three percent. It's not massive.
Speaker 2: Why did the NBA get religion on analytics before after baseball,
Speaker 2: I suppose, but maybe not that much.
Speaker 3: In oh, I think even at the league level, I
Speaker 3: think before they were the first to do a lot
Speaker 3: of analytics on the business side that was shared with teams.
Speaker 3: So I would say the NBA was sort of for
Speaker 3: the teams on baseball were before the teams in basketball.
Speaker 3: But at the league level, I think I'm pretty confident
Speaker 3: the NBA was first. Yeah.
Speaker 2: So my pet theory is that this is because the
Speaker 2: NBA tends to attract new money owners, so people in
Speaker 2: financeer tech, who not some old magnate of some shitty
Speaker 2: beer company. You're not to demean, by the way sponsor
Speaker 2: us Bush Bush and bud Light, we weren't sponsorship can
Speaker 2: advertise your hard Seltz probably.
Speaker 3: One of the top agents in basketball is like the
Speaker 3: nephew of the Bush Anheuser Busch empire. So but yeah, no,
Speaker 3: I think you're one hundred percent right, Nate. The owners
Speaker 3: both the price point and you know, the sophisticated owners
Speaker 3: who were buying in in the late nineties through the
Speaker 3: two thousand to the twenty ten twenty fifteen range. They
Speaker 3: all sort of saw the NBA getting more global, getting bigger.
Speaker 3: They saw baseball declining. They saw the cat like the
Speaker 3: cap system and the NBA has better and so yeah,
Speaker 3: all the sophisticated owners came into the NBA, I think
Speaker 3: before pretty much all these other major leagues.
Speaker 2: Yeah, when you're watching a game, would you say you're
Speaker 2: I know the answer this question, So don't lie. Are
Speaker 2: you relatively zen when you're watching a game?
Speaker 3: If I'm watching, I'm very nodsen. You know. That's why
Speaker 3: I know it make a terrible coach. I spent. I
Speaker 3: even have a formula, sadly for when I go nuts,
Speaker 3: and it's it's it's basically just like when the win
Speaker 3: probability of either a game or even a play goes
Speaker 3: way up to where you start, as even a probabilistic thinker,
Speaker 3: you start to go to one instead of point nine,
Speaker 3: you know, in your head, and then it doesn't happen.
Speaker 3: For especially if it doesn't happen for some really dumb
Speaker 3: reason that could have been prevented. It gets Yeah, that
Speaker 3: gets really annoying and hard given how much time and
Speaker 3: work and effort goes into things from the front office,
Speaker 3: from the players, from everything. So example, you know you're
Speaker 3: up twenty five in a playoff game, you know that,
Speaker 3: and you lose it, that gets tough. Or you know
Speaker 3: the small ones which are done, which is like breakaway,
Speaker 3: we get a steal and it's a breakaway and the
Speaker 3: guy like you know, gets fouled from behind, but they
Speaker 3: don't call it. You know that. Like that kind of
Speaker 3: stuff just throws me for a loop. It makes no sense,
Speaker 3: but it does. Yeah, I'm very zen when the when
Speaker 3: the odds of winning drop very low, I just sort
Speaker 3: of like try to like learn things at that point.
Speaker 1: So that's called fatalistic not zend.
Speaker 3: Yeah, I call it pessimistic optimism. That's my it. Is
Speaker 3: it called fatalistic or nihilistic hope?
Speaker 1: Yeah, at that point when you're like, Okay, there's just
Speaker 1: no way in hell this is happening.
Speaker 3: So so what would be the punk requllment? Like you're
Speaker 3: in a hand that you're you're pot you're heavily pot committed,
Speaker 3: Like the right strategy is still to stay in the
Speaker 3: hand even though your odds of winning it at that point,
Speaker 3: you know, have to be like twenty percent or something
Speaker 3: like that.
Speaker 1: No, I mean, I think I think in poker, you know,
Speaker 1: being zen is quite important. And I would say there's
Speaker 1: no situation where your pot committed and you have to
Speaker 1: stay in the hand. If you think your odds have
Speaker 1: dropped to twenty percent, as long as you have any
Speaker 1: chips behind, you can always fold. And I think that
Speaker 1: that's really important. And I think that people who get
Speaker 1: too emotionally invested forget that, they forget that you are
Speaker 1: always allowed to fold, and they get to this point
Speaker 1: where like, no, but like this was supposed to go
Speaker 1: this way, and so they like end up putting those
Speaker 1: final chips in the middle. And I've done that, and
Speaker 1: I've written about doing that, and it's a horrible feeling,
Speaker 1: you know, when you like, either when someone else goes
Speaker 1: you into it or when you go yourself into going
Speaker 1: broke even though you like you knew that you were maid.
Speaker 3: Yeah, and so on your trip sixes or whatever it
Speaker 3: was to knock you out of the World Series at
Speaker 3: place eighty seven, were you Darrel? You're gonna bring that up?
Speaker 3: Is we should talk about it else?
Speaker 2: The twenty seven consecutive miss three pointers.
Speaker 3: We all name us. We all name us twenty five
Speaker 3: because the league report after said they followed us on too.
Speaker 3: So the official the official record for me is twenty
Speaker 3: five misses. So well, you asked how zen I was,
Speaker 3: so it seemed to.
Speaker 2: I mean, you don't really Actually it's a little bit ambiguused.
Speaker 2: You don't really have any influence over the game. I've
Speaker 2: talked about this before. What are you allowed to communicate
Speaker 2: to other people that are on the floor during the game.
Speaker 3: So it's actually even gotten more ridiculous. So they they
Speaker 3: at first the league, even when I first started the league,
Speaker 3: like two thousand and four, I joke with them in
Speaker 3: a very you know, geeky nerdy way. Unfortunately, they they
Speaker 3: banned electromagnetic signals to the bench, like you couldn't text anyone,
Speaker 3: you can't call any common Well it was all data
Speaker 3: calls by then, so but you could still I could
Speaker 3: still sit behind the bench to rows and yell somebody.
Speaker 3: So vibrating molecules are fine for communicating, but electromatic signals
Speaker 3: not allowed by the league, which to this day I
Speaker 3: believe that's the rule. But then they made it even worse.
Speaker 3: This year they passed a ridiculous band on anyone using
Speaker 3: cell phones forty five minutes before the game till after
Speaker 3: which we'll see how that goes. But yeah, I can
Speaker 3: still sit behind the bench and yell to my hearts
Speaker 3: content and hands signals. Yeah, smoke signal like the Popes used.
Speaker 3: We can do that. We have lots of yeah that
Speaker 3: we can well, no, it's electric. Oh shoot, I screwed up.
Speaker 3: We're allowed to use the electromatic spectrum in the visual range.
Speaker 3: I'm sorry. So we can use the ones our eyes
Speaker 3: can see. We're still to use, but all others are banned.
Speaker 3: So yeah, So I to answer your question, I don't
Speaker 3: have much impact. Sometimes there's some halftime things where I'll
Speaker 3: mention something, but our coaches are very good. It's never
Speaker 3: anything relevant that would change the outcome of something.
Speaker 2: So are there examples of where the nerds have gone
Speaker 2: too far? Things that were kind of superficial conclusions based
Speaker 2: on the analytics?
Speaker 3: Yeah, I mean hot hands, the easy one. Yeah, I
Speaker 3: think anyone who played which I did play, that was
Speaker 3: you know best. Suppose my sport I wasn't very good.
Speaker 3: I can play at the pro level, of course, but
Speaker 3: you do sort of get that feeling of muscle memory
Speaker 3: and all that. The hot hand was thought to not exist,
Speaker 3: mostly because they didn't factor for people who think they're
Speaker 3: hot shooting really hard shots. So once once you adjust
Speaker 3: for that effect, there is a hot hand effect. That's
Speaker 3: one I think, gosh, there's got to be a bunch.
Speaker 2: Like I mean, clutch performance. You are the former possessor
Speaker 2: of Ben Simmons's NBA playing rights.
Speaker 3: Yeah, I think that one's a tough one. No, they're
Speaker 3: you just never have enough end to confidently say. But
Speaker 3: for sure, when people look back, they can show player
Speaker 3: X or Y was more clutch and high leverage moments,
Speaker 3: but no one's been able to show that they could
Speaker 3: predict that. You know X post. So clutch is a
Speaker 3: good one.
Speaker 2: And we'll be right back after this break. We're going
Speaker 2: to try to wrap up in the next few minutes.
Speaker 3: To Nate, though I have to call it Nate yesterday please.
Speaker 3: So Nate, being a very good Chicago crad, assumed efficient
Speaker 3: market theory is correct, and he managed he managed to
Speaker 3: stumble into like one of the areas of which there's
Speaker 3: thousands of papers where it's not correct, and there's a
Speaker 3: lot of hypotheses and even some leading hypotheses. We not,
Speaker 3: so he took an anti momentum stance. And to be clear,
Speaker 3: you have to get very very geeky and say, like,
Speaker 3: yes there is a it is mostly a random walk
Speaker 3: from day to day, which I think you mentioned the
Speaker 3: stock market. We're in the stock market, but you use
Speaker 3: like the stock markets a proxy of live momentum can't
Speaker 3: exist in political markets or probably doesn't exist when momentum
Speaker 3: is for sure a factor to use the quant So
Speaker 3: ray I would ask you who used to run quantic
Speaker 3: gold sacks, and I you know, I have a lot
Speaker 3: of money in that factor because it's worked for one
Speaker 3: hundred years, hundreds of years. And they think that momentum
Speaker 3: is a real thing in the stock market that you
Speaker 3: can trade on, even though everyone knows it. It breaks
Speaker 3: every for a couple of reasons. One, they think that
Speaker 3: there's a lot of papers when people are slow to
Speaker 3: react to information, so you know, there's some news and
Speaker 3: people don't the beginning to realize how big that might
Speaker 3: end up being until multiple days later. So so of
Speaker 3: course you can be wrong. But again the the the
Speaker 3: overall bet is the momentum does slightly work and you
Speaker 3: can trade it. The second one is that there are
Speaker 3: these you know, to use a there are these whale
Speaker 3: insiders that move markets, and you're basically free writing on
Speaker 3: their information when they when they first make those first
Speaker 3: make those bets. So those are two of the reasons.
Speaker 2: So number number go up on number strategy if done
Speaker 2: very characters sophisticated, I would I would definitely recommend that
Speaker 2: both of you put some some percentage of your of
Speaker 2: your wealth and a momentum stock because it's you know.
Speaker 3: It's similar to do you know about the long shot
Speaker 3: bias and gambling. I'm sure you do. They ain't sure.
Speaker 3: So people don't like to bet sure things. They like
Speaker 3: to bet long shots. So because of that, the sure
Speaker 3: things have this long, long history and it still exists
Speaker 3: if they let you put any money down, it still
Speaker 3: exists that if you bet the favorites and you bet
Speaker 3: that with enough money that you can that you can
Speaker 3: you know, overall win essentially, and I know people have
Speaker 3: funds that do exactly that. Oh there's one last reason
Speaker 3: they think momentum still exists. It's that's because people hate
Speaker 3: losing their money, right, and there's a fatter tail on
Speaker 3: the downside of momentum, then there is on an upside.
Speaker 3: Does that make sense? So so you you're more likely
Speaker 3: to lose big with momentum strategies in certain in certain
Speaker 3: market environments than others. But over yeah, but but over
Speaker 3: time it absolutely wins over one hundred years plus. So yeah. Yeah. Oh,
Speaker 3: can I ask so, given you just got a crash
Speaker 3: course in quant momentum, is there any I would think
Speaker 3: one of those fits that that if people are betting
Speaker 3: heavily on Trump or or or Kamala, that there may
Speaker 3: be signal that the market hasn't picked up yet.
Speaker 2: Could I am skeptical about empirically the betting markets underperform okay,
Speaker 2: under from polling based methods, got it?
Speaker 3: I mean it's been weird. Let's say just polls. Can
Speaker 3: you is their momentum to polls the potentially there's a
Speaker 3: good question.
Speaker 2: Yeah, I mean it's you can get these feedback effects,
Speaker 2: and it's some question as whether they're real or whether
Speaker 2: they're fake. Right, But like in principle, can it has
Speaker 2: a good poll that that gets good media coverage, which
Speaker 2: gets more polling, But then the equilibrium kind of shifts
Speaker 2: because people get bored and now expectations are higher, so
Speaker 2: you kind of wind up with like a sine wave pattern.
Speaker 2: But yeah, no, I mean it's it's a lot of
Speaker 2: things where to a first approximation, ignore the hot hand,
Speaker 2: ignore momentum. Then you start studying and it's like, okay,
Speaker 2: now we're advanced enough where we have to think about
Speaker 2: the second approximation and a third order effects and so forth,
Speaker 2: and you know, the sophistication of the NBA now or
Speaker 2: of Wall Street or a poker are such that, like
Speaker 2: you do have to take into account the edge case
Speaker 2: stuff sometimes.
Speaker 3: Can I ask him, Maria, because you're probably the best
Speaker 3: poker player on here is my guess.
Speaker 1: How much do you are winning the World Series of Needles?
Speaker 1: Do you.
Speaker 3: What is what is the meta? Like? Do you have
Speaker 3: to train with like a solver all the time or
Speaker 3: do you just play a lot? Or how do you
Speaker 3: get reinforcement learning? Yeah?
Speaker 1: Yeah, I think these days, because the solvers are quite
Speaker 1: good and there are really great ais that you can
Speaker 1: play against, I think that that's actually quite important so
Speaker 1: that you can get that feedback and see what the
Speaker 1: optimal strategy would be. And then it's like with every thing, right,
Speaker 1: that's your baseline and then you absolutely deviate, right, because
Speaker 1: the people you're playing against in large field events do
Speaker 1: not play like the solver, right unless I am playing
Speaker 1: like the ten best players in the world, Like, they're
Speaker 1: not going to be playing optimal strategy. And sometimes they
Speaker 1: don't even understand what optimal strategy is in the sense
Speaker 1: that like, so.
Speaker 3: Aren't there mix is aren't there mixed player simulators?
Speaker 1: Or yeah, yes, well no there aren't there. There aren't
Speaker 1: unless unless what you do, so you can play around
Speaker 1: with the ranges, right, This is like any algorithm garbage in,
Speaker 1: garbage out, yeah, right, and and good stuff and good
Speaker 1: stuff out. And so you make assumptions about hand ranges
Speaker 1: before you before you do any of this, before you
Speaker 1: run sims, before you kind of do a hand deconstruction
Speaker 1: where you say, I think the player in this position
Speaker 1: is opening these hands, right, and I think that this
Speaker 1: player is playing these hands. And you can be right
Speaker 1: or you can be wrong. But there's a thing called
Speaker 1: node locking, which is something that you can do when
Speaker 1: you mimic bad players, right, So you can node lock
Speaker 1: it to say, Okay, no, you're telling me that the
Speaker 1: correct thing here is to raise, but I'm going to
Speaker 1: say that this person never raises right, So I'm going
Speaker 1: to node lock.
Speaker 3: It is not an option. I've been noad locking my
Speaker 3: whole career. I've been node locking then.
Speaker 1: So then you can see how the strategy changes, so
Speaker 1: you can play with the solvers to show you how
Speaker 1: to deviate against specific opponent types. But you know, as
Speaker 1: Nate said, like when it comes to when it comes
Speaker 1: to anything like, it can be dangerous, Like you need
Speaker 1: to make sure you really understand the baseline and that
Speaker 1: you really like have the ground strategy really solid, So
Speaker 1: you have to do both. But these days, I do
Speaker 1: think you need to use the solvers and the analytics
Speaker 1: as well. So I think that's important. And I know
Speaker 1: that we're basically out of time, Nate. Between you and
Speaker 1: Darryl needling each other, it was definitely a nice reality
Speaker 1: TV edition of Risky Business. So I hope everyone has
Speaker 1: enjoyed that very much. And I've loved being I've really
Speaker 1: enjoyed like just being a fly on the wall for
Speaker 1: those back and forth exchanges.
Speaker 3: I love it.
Speaker 1: Let's let's do it more, Daryl. We'll have to have
Speaker 1: you back.
Speaker 3: He resisted any nicks zings.
Speaker 2: Thank you name, Darryl.
Speaker 3: I mean I look.
Speaker 2: It was a great series. You guys fought hard. You
Speaker 2: guys fought hard. It was an excellent basketball series, and
Speaker 2: as a Knicks fan, I was happy with the outcome.
Speaker 2: So thank you for that and thanks for coming on.
Speaker 3: Thanks, Thanks Branda, Thanks Man.
Speaker 1: Let us know what you think of the show. Reach
Speaker 1: out to us at Risky Business at pushkin dot Fm.
Speaker 1: Risky Business is hosted by me Maria Kanakova and.
Speaker 3: By me Nate Silver.
Speaker 2: The show was a cool production of Pushing Industries and iHeartMedia.
Speaker 2: This episode was produced by Isaac Carter. Our associate producer
Speaker 2: is Sonya gerwit Lydia, Jean Kott and Daphne Chen are
Speaker 2: our editors, and our executive producer is Jacob Goldstein. Mixing
Speaker 2: by Sarah Bruger.
Speaker 1: If you like the show, please rate and review us
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