WEBVTT - One Of The Top Chess Players Talks Computers & Options Trading 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.520 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.520 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:26.920 T dot com put Knowledge to Work. Hello, and welcome 0:00:26.960 --> 0:00:30.800 to another episode of The Odd Lots podcast. I'm Joe 0:00:30.840 --> 0:00:35.680 Wisenthal and I'm Tracy Alloway. So, Tracy, before we uh, 0:00:36.240 --> 0:00:40.880 before we got on here, you were joking that today's episode, 0:00:40.960 --> 0:00:43.519 if we wanted, we could probably go for three hours, 0:00:43.640 --> 0:00:47.680 or at least I could. Yeah, I'm I was joking 0:00:47.760 --> 0:00:50.720 about that, and I'm laughing right now because I think 0:00:50.720 --> 0:00:54.480 I can sense your excitement from thousands and thousands of 0:00:54.520 --> 0:00:57.120 miles away from New York. Yeah, I'm not going to 0:00:57.240 --> 0:01:01.240 deny that I'm extremely excited about today's episode, and if 0:01:01.240 --> 0:01:03.520 we didn't have time constraints, we could probably go a 0:01:03.560 --> 0:01:06.760 long time. But I really think our guest today is 0:01:06.920 --> 0:01:10.039 right in the sweet spot of some of the biggest 0:01:10.080 --> 0:01:13.120 themes that we've covered on this podcast and all the 0:01:13.120 --> 0:01:17.240 time that we've done it. Wait, so who is it 0:01:17.400 --> 0:01:20.000 and why do you think that? So we're not We're 0:01:20.160 --> 0:01:22.880 We're just gonna completely dispense with all the preamble and 0:01:22.959 --> 0:01:25.120 jump straight into the guests and just just get right 0:01:25.160 --> 0:01:27.959 into it. Well, I have a major preamble that I 0:01:28.000 --> 0:01:30.240 want to give before we get to the guests. But 0:01:30.240 --> 0:01:31.959 why don't you say who it is? Because I know 0:01:32.000 --> 0:01:34.520 that you you want to talk about him. Okay, I'm 0:01:34.600 --> 0:01:38.039 very excited. Our guest today is maybe the first sort 0:01:38.080 --> 0:01:41.479 of legit celebrity that we've had on the Odd Lots podcast. 0:01:41.800 --> 0:01:45.319 His name is Hikaru Nakamura. He is one of the 0:01:45.360 --> 0:01:49.040 top chess players in the entire world right now. He's 0:01:49.160 --> 0:01:53.840 rated around number seven. I believe he he was a prodigy, 0:01:53.920 --> 0:01:56.520 he earned his he became a grand master at age ten. 0:01:56.680 --> 0:02:00.360 If Wikipedia is correct. He's mad, he's giving a face. 0:02:00.400 --> 0:02:02.920 I don't know if that's completely agurd, but very young. 0:02:03.520 --> 0:02:07.840 And in addition to being a chess phenomen he also 0:02:08.040 --> 0:02:12.880 does other stuff like trading options and at times play 0:02:12.919 --> 0:02:17.080 poker competitively. So he's just a completely sweet spot Odd 0:02:17.120 --> 0:02:20.040 Lots guest here, all right, And obviously we've had a 0:02:20.040 --> 0:02:23.200 lot of episodes about trading and investing. We've also had 0:02:23.240 --> 0:02:26.760 episodes in the past about chess and poker, so I 0:02:26.800 --> 0:02:29.760 can see how you would be very very enthusiastic about 0:02:29.800 --> 0:02:33.000 this one. Here is my major preamble for you, Joe. 0:02:34.120 --> 0:02:39.160 I know absolutely nothing about chess. In fact, I find 0:02:39.280 --> 0:02:42.600 chess extremely frustrating because whenever I play with my husband, 0:02:42.680 --> 0:02:46.519 he doesn't let me win ever. In fact, he uses 0:02:46.560 --> 0:02:49.280 that what's that thing where you win in like two moves? 0:02:49.919 --> 0:02:54.200 That's so cringe, so cringe the the scholars mate, Well, 0:02:54.280 --> 0:02:57.359 whatever it is, he's done it to me several times now, 0:02:57.360 --> 0:03:01.360 and I fall for it every single time. So everyone 0:03:01.480 --> 0:03:03.120 is just going to have to bear with me asking 0:03:03.240 --> 0:03:06.400 very very basic questions about chess. But I actually read 0:03:07.000 --> 0:03:10.519 on Hikaru's Wikipedia page as well that he has an 0:03:10.600 --> 0:03:15.239 uncommon enthusiasm for chess and is known for being far 0:03:15.360 --> 0:03:18.919 more approachable than other players of his abilities. So I'm 0:03:18.960 --> 0:03:21.600 I'm sure he's going to humor me, right, Well, I 0:03:21.639 --> 0:03:24.359 think that sounds like an ideal guest. So I say 0:03:24.400 --> 0:03:37.320 we should just get started, Karo. Welcome up, Welcome to 0:03:37.400 --> 0:03:39.840 the show. That's good to be here, Joe. So you 0:03:39.880 --> 0:03:41.840 were making a face. I said something about when you 0:03:41.880 --> 0:03:45.680 achieved grand master status? When did you become a grand master? 0:03:46.120 --> 0:03:48.560 And uh, I think it said you got there faster 0:03:48.640 --> 0:03:51.640 than Bobby Fisher did, Is that right? Yeah? So, um, 0:03:51.680 --> 0:03:53.440 so when you referred to being ten years old, that's 0:03:53.440 --> 0:03:57.480 when I became the youngest master. That's slightly lower ranking, 0:03:57.560 --> 0:04:00.240 but um, at the time, at least they had they 0:04:00.320 --> 0:04:02.440 kept that record in the Guinness Book of World Records. 0:04:02.480 --> 0:04:04.600 So when I was very young, like I was trying 0:04:04.600 --> 0:04:07.160 to get to that level and so that was important. 0:04:07.160 --> 0:04:09.280 But I became a grand master I was fifteen years old. 0:04:09.800 --> 0:04:11.360 I was about a month and a half younger than 0:04:11.400 --> 0:04:13.720 Bobby Fisher. So that made me the youngest American grand 0:04:13.760 --> 0:04:17.040 master in the world at the time. I guess that's impressive. 0:04:17.680 --> 0:04:20.800 Uh when did you so, you know, it's always sort 0:04:20.800 --> 0:04:24.159 of an interesting question with sort of young prodigies phenomens. 0:04:24.839 --> 0:04:28.480 What was the moment early on where someone or you 0:04:28.600 --> 0:04:32.240 recognize that you were on a different level than other 0:04:32.279 --> 0:04:36.159 people who were learning at the same time. Well, I think, um, 0:04:36.480 --> 0:04:38.240 it's not so much that I was on a different level. 0:04:38.279 --> 0:04:40.599 There are there are a lot of talented young kids 0:04:40.640 --> 0:04:43.080 who played chess, and um, I think it was just 0:04:43.160 --> 0:04:46.479 that I had this this will will in, this motivation 0:04:46.560 --> 0:04:49.000 with within me to just keep trying to win every 0:04:49.040 --> 0:04:52.680 game all the time and UM. And when when you 0:04:52.680 --> 0:04:55.600 start performing, even at like eleven or twelve years old, 0:04:55.640 --> 0:04:59.479 by being strong grand masters, UM, it certainly shows that 0:04:59.520 --> 0:05:01.159 you have talent and and it's it's a matter of 0:05:01.200 --> 0:05:03.760 taking that talent and just keep keeping up and keep 0:05:03.760 --> 0:05:07.880 going forward with it and UM. And basically, I would 0:05:07.920 --> 0:05:10.400 say from the time I was about fifteen, I had 0:05:10.400 --> 0:05:13.800 a certain inclination that I might become a professional chess player, 0:05:13.800 --> 0:05:15.839 but it wasn't until I was probably nineteen or twenty 0:05:15.880 --> 0:05:18.320 that that actually came to fruition because I've had a 0:05:18.320 --> 0:05:21.120 lot of many other interests in my life, so there 0:05:21.160 --> 0:05:23.000 there have been many other things that I've I've been 0:05:23.000 --> 0:05:26.400 doing with my time as well. Was chess something that 0:05:26.440 --> 0:05:29.400 you were naturally attracted to at a young age? And 0:05:29.720 --> 0:05:33.039 you know, if so, what did you like about it? Well? 0:05:33.080 --> 0:05:35.480 I think when when you think about chess, you hear 0:05:35.520 --> 0:05:38.280 a lot of stories about these kids who are just 0:05:38.320 --> 0:05:40.240 great from the time that they first started playing. It's 0:05:40.279 --> 0:05:42.120 just they're they're just amazing and they just win every 0:05:42.120 --> 0:05:45.360 game the start. UM. Whereas for me, that certainly wasn't 0:05:45.400 --> 0:05:48.120 the case when I when I started out playing my 0:05:48.200 --> 0:05:50.520 first tournament, for example, I played four games and I 0:05:50.520 --> 0:05:53.760 lost every single one, and the first year that I 0:05:53.760 --> 0:05:56.720 played chess, I did not have many great results, and 0:05:56.960 --> 0:06:00.280 my parents actually stopped me from playing for about six months. 0:06:00.360 --> 0:06:02.960 And it was only when I came back that that 0:06:03.320 --> 0:06:06.560 some something clicked and I just happened to start winning games, 0:06:06.680 --> 0:06:09.000 um and then from there it just kept, you know, 0:06:09.040 --> 0:06:12.640 I just kept going forward. But certainly it's not something 0:06:12.680 --> 0:06:16.080 that I had a natural talent for, and actually most things, um, 0:06:16.120 --> 0:06:19.120 I don't seem to have a natural talent, which in 0:06:19.120 --> 0:06:20.440 a way, I think is a good thing, because I 0:06:20.480 --> 0:06:22.800 think the harder you have to work for something, um, 0:06:23.279 --> 0:06:26.080 the better you become at it. And when you hit 0:06:26.120 --> 0:06:27.760 the when you hit the wall, you kind of you 0:06:27.760 --> 0:06:30.840 you keep trying, you find a way to persevere. Whereas 0:06:30.960 --> 0:06:32.440 there there have been a lot of other kids who 0:06:32.440 --> 0:06:34.000 were much better than I was when they were young, 0:06:34.080 --> 0:06:36.359 but it's just it was a straightforward path, and so 0:06:36.400 --> 0:06:38.880 they just became really good, really quickly, and then at 0:06:38.880 --> 0:06:41.080 a certain point they hit the wall and they didn't 0:06:41.080 --> 0:06:43.839 know how to how to go from there because they 0:06:43.920 --> 0:06:47.720 just couldn't couldn't improve. And I basically had to learn 0:06:47.720 --> 0:06:49.480 how to improve from the very start. So I think 0:06:49.480 --> 0:06:52.040 it's it's uh for me at least, it's been very 0:06:52.120 --> 0:06:54.800 useful that I don't have a natural talent for a 0:06:54.800 --> 0:06:58.360 lot of things. Talk about that a little bit more 0:06:58.400 --> 0:07:01.159 breaking through because I think had something a lot of 0:07:01.160 --> 0:07:04.800 people experience and all kinds of endeavors where maybe they 0:07:04.880 --> 0:07:07.599 hit a wall for their talent or they can't figure 0:07:07.640 --> 0:07:10.400 out how to take it to the next level. What 0:07:10.440 --> 0:07:12.320 was it? I mean, anyone could say you have to 0:07:12.360 --> 0:07:14.920 work hard and concentrate, but even that often doesn't do 0:07:15.000 --> 0:07:17.880 it for a lot of people. So that process of 0:07:17.960 --> 0:07:21.760 figuring out your problem, solving it, and actually being able 0:07:21.800 --> 0:07:26.960 to make material gains in your improvement, what did that entail? UM? 0:07:27.000 --> 0:07:29.320 I mean obviously working hard, I mean it is a 0:07:29.320 --> 0:07:31.160 big part of it, but I think in general it's 0:07:31.200 --> 0:07:34.000 just you know, believing, believing in yourself, believing in the 0:07:34.040 --> 0:07:37.920 process no matter what. UM I think. There there were 0:07:37.920 --> 0:07:41.800 many times when I stopped, stopped improving, and and one 0:07:41.880 --> 0:07:45.360 one good example was when I was about seventeen years old. 0:07:45.360 --> 0:07:47.160 I had become a really strong grand master. I was 0:07:47.200 --> 0:07:48.920 top one hundred in the world, but I was stuck 0:07:48.960 --> 0:07:51.920 around fiftie in the world, and for a period of time, 0:07:52.040 --> 0:07:54.840 I went to college I quit chest for for about 0:07:54.920 --> 0:07:58.240 seven to eight months, um, and just by being away 0:07:58.280 --> 0:08:00.280 from it. When I came back, of course I i 0:08:00.280 --> 0:08:02.600 started working hard again, but I just learned how to 0:08:02.720 --> 0:08:06.120 enjoy it. And I think it's it's important that besides 0:08:06.160 --> 0:08:07.800 the hard work that you have to you have to 0:08:07.920 --> 0:08:10.760 enjoy it. You have to really be into and be 0:08:10.760 --> 0:08:14.040 passionate about it, because otherwise, uh, otherwise you're just not 0:08:14.080 --> 0:08:16.240 going to go anywhere. And um, I think I think 0:08:16.240 --> 0:08:18.400 for me it was it was just learning how to 0:08:18.520 --> 0:08:21.200 enjoy it again and kind of like remembering what the 0:08:21.200 --> 0:08:22.920 whole point of it was in the first place, which 0:08:22.960 --> 0:08:24.760 is you know, it's a game, but you you want 0:08:24.760 --> 0:08:26.160 you want to have fun, you want to do well, 0:08:26.200 --> 0:08:29.360 but just enjoying enjoying everything about it. How did you 0:08:29.400 --> 0:08:33.840 actually turn professional? And how does the business of being 0:08:33.880 --> 0:08:37.040 a professional chess player actually work? Like? How are you 0:08:37.120 --> 0:08:40.560 rewarded for playing games? Are there sponsorships? How do you 0:08:40.559 --> 0:08:43.120 make money? So? Yeah, so chess, um, it's it's one 0:08:43.160 --> 0:08:45.920 of those fields where it's very much a meritocracy, so 0:08:46.000 --> 0:08:49.520 it's all based on your results and going professional. It's 0:08:49.559 --> 0:08:52.719 not like like a major sport, for example, where you 0:08:53.080 --> 0:08:56.680 know a team drafts you or something along those lines. Basically, uh, 0:08:57.000 --> 0:08:59.600 you just decide on your own to just devote your 0:08:59.640 --> 0:09:02.840 life to laying chess and um, and they're there are 0:09:02.840 --> 0:09:05.560 people in the world who would consider themselves professional chess 0:09:05.600 --> 0:09:08.559 players who are who are not even grand masters. So um, 0:09:08.640 --> 0:09:10.520 there there are. There are a lot of different ways 0:09:10.559 --> 0:09:14.240 of defining a professional. But UM, I would say that 0:09:14.280 --> 0:09:17.040 probably the top twenty five thirty players in the world 0:09:17.080 --> 0:09:19.319 make a very good living playing it. Um in large 0:09:19.320 --> 0:09:23.520 part because the major events with big sponsors, UM, they 0:09:23.600 --> 0:09:26.080 are invitational only, so you have maybe the top ten, 0:09:26.160 --> 0:09:28.520 top fifteen players in the world and in some order 0:09:28.600 --> 0:09:32.240 who are invited and therefore, um, outside of that, it's 0:09:32.320 --> 0:09:35.720 very hard. Usually you go from tournament to tournament, country 0:09:35.720 --> 0:09:37.880 to country just trying to earn a living, and it's 0:09:37.920 --> 0:09:39.760 it's very difficult, which is why there are a lot 0:09:39.760 --> 0:09:42.160 of people who I think when they're younger, like in 0:09:42.160 --> 0:09:44.960 their early twenties, they try to play chess professionally, but 0:09:45.000 --> 0:09:46.760 at some point if they don't break into that top 0:09:46.760 --> 0:09:49.800 twenty five, top thirty in the world, UM, they they 0:09:49.840 --> 0:09:53.520 eventually quit. And as far as the rankings go, every game, UM, 0:09:53.600 --> 0:09:56.120 you you gain points or you lose points based on 0:09:56.240 --> 0:09:59.600 what you're elo ranking is UM and whether the opponent 0:09:59.640 --> 0:10:01.520 you're playing as lower ranked or higher ranked than you. 0:10:02.120 --> 0:10:06.000 So let's saig here a little bit, because in the 0:10:06.040 --> 0:10:10.640 intro we talked about how chess isn't your only pursuit. 0:10:10.840 --> 0:10:14.959 It's not your only passion. You're also into trading and 0:10:15.120 --> 0:10:18.040 options trading. In fact, you tweet, UM. I think you 0:10:18.040 --> 0:10:20.760 actually tweet a lot. I've seen more tweets I think 0:10:20.760 --> 0:10:24.520 about options, various options trades that you do than chess, 0:10:24.559 --> 0:10:26.760 at least as far as I've noticed. Where did that 0:10:26.880 --> 0:10:30.320 come from? UM, I've I've always had an interest in 0:10:30.400 --> 0:10:33.120 finance since I was very young. UM. When I was 0:10:33.120 --> 0:10:36.040 about fourteen or fifteen, my my my mom bought me 0:10:36.080 --> 0:10:38.360 a couple of books that it was just about general 0:10:38.480 --> 0:10:41.240 general investing UM, and I happen to read them and 0:10:41.240 --> 0:10:44.120 I found it found it quite interesting, quite fascinating, UM. 0:10:44.160 --> 0:10:47.840 How the markets work, UM, you know, in investing in companies, 0:10:47.880 --> 0:10:51.120 trying trying to make money UM over the long term. 0:10:51.240 --> 0:10:54.000 And so I kind of started with a very small 0:10:54.000 --> 0:10:56.520 account UM. And it remained that way for a long time. 0:10:56.720 --> 0:11:01.199 Primarily I was just trading in equities UM. But about 0:11:01.240 --> 0:11:02.839 a year and a half ago I started I started 0:11:02.840 --> 0:11:05.560 getting into options. Originally it was because I started looking 0:11:05.600 --> 0:11:08.760 into um uh you know, writing calls against stock that 0:11:08.800 --> 0:11:11.480 I had purchased, and from there kind of I started 0:11:11.480 --> 0:11:14.760 looking at more options strategies and a few people I know, 0:11:15.040 --> 0:11:18.720 I'm very fortunate in that regard um have been options 0:11:18.720 --> 0:11:21.840 traders professionally, and so they they've helped me along the 0:11:21.880 --> 0:11:25.040 way to you know, kind of figure out how how 0:11:25.080 --> 0:11:28.560 to learn strategies and go from there. This might be 0:11:28.600 --> 0:11:31.600 a slightly random question, but is there any direct relation 0:11:31.760 --> 0:11:34.520 between what you do when it comes to chess and 0:11:34.960 --> 0:11:38.320 the way you trade options. I think one of the 0:11:38.360 --> 0:11:41.439 main things is not just options, but markets in general, 0:11:41.600 --> 0:11:44.360 is um that chess players tend to be very analytical. 0:11:44.600 --> 0:11:47.120 And I think that when you're looking at the markets, 0:11:47.120 --> 0:11:49.760 whether it's options, whether it's equities, no matter what the 0:11:49.800 --> 0:11:52.440 time frame, you have to be analytical. You have to 0:11:52.520 --> 0:11:54.960 look at it from a perspective of you know, planning ahead, 0:11:54.960 --> 0:11:57.040 trying to figure out what can go right, what can 0:11:57.080 --> 0:11:59.600 go wrong? What are what are the very scenarios? UM. 0:11:59.760 --> 0:12:02.040 It's much with options. You know, if you're if you're 0:12:02.080 --> 0:12:04.920 doing um, you know, say like a a spread for example, 0:12:05.000 --> 0:12:07.560 or if you're doing like you know, ratios or just 0:12:07.640 --> 0:12:10.480 straight you know, calls or puts um trying to figure out, 0:12:10.520 --> 0:12:13.200 you know, based on certain events, what happens, you know, 0:12:13.280 --> 0:12:16.000 what's the breaking point assuming it you know, you don't 0:12:16.080 --> 0:12:20.080 it doesn't go uh, you know, straight up or straight down, um, 0:12:20.160 --> 0:12:22.079 and going from there. So in general, it's just being 0:12:22.160 --> 0:12:26.080 very analytical and thinking ahead. That's that's the biggest correlation there. 0:12:26.120 --> 0:12:28.320 There are, in fact, a lot of people I know 0:12:29.160 --> 0:12:31.880 growing up who actually have ended up in finance as well, 0:12:31.920 --> 0:12:35.160 and I don't think that's a coincidence. Now, a lot 0:12:35.200 --> 0:12:39.120 of people would say that there's a fundamental difference between 0:12:39.160 --> 0:12:43.040 any sort of trading activity and chess, And of course 0:12:43.200 --> 0:12:45.320 the sort of big gap is the role of chance 0:12:45.720 --> 0:12:49.840 and the role of psychology playing a much more outsized 0:12:49.960 --> 0:12:53.400 role in markets. And so you can calculate something perfectly 0:12:53.400 --> 0:12:55.880 in chess and then you can execute it, and if 0:12:55.880 --> 0:12:59.040 it's if you calculated correctly, there's nothing your opponent can do, 0:12:59.679 --> 0:13:03.080 where as all kinds of things can happen in markets. 0:13:03.160 --> 0:13:05.720 You could have the perfect strategy and then something could 0:13:05.720 --> 0:13:07.640 come out of nowhere, or there could be a bubble 0:13:08.000 --> 0:13:11.360 or some sort of panic that totally destroys the calculations. 0:13:11.640 --> 0:13:15.240 You know, there's this element that doesn't exist on the chessboard. 0:13:15.520 --> 0:13:19.640 How hard is it to shift thinking from one realm 0:13:19.720 --> 0:13:22.560 to another? For me, it's not that hard. And and 0:13:22.600 --> 0:13:24.880 actually it brings up something else that I'm kind of 0:13:24.880 --> 0:13:27.800 curious about, which is I've actually thought that trading is 0:13:27.800 --> 0:13:30.319 a little bit closer to poker in some ways from 0:13:30.360 --> 0:13:33.400 that standpoint, and um, I'm a little bit curious to 0:13:33.480 --> 0:13:36.000 kind of try it out because originally I played, I 0:13:36.040 --> 0:13:38.520 played some poker, and then then then I eventually got 0:13:38.559 --> 0:13:40.400 into trading. So it's kind of like, because I was 0:13:40.400 --> 0:13:43.840 a strong chess player, I couldn't handle the chance element 0:13:44.000 --> 0:13:46.800 in poker, whereas I seem to handle handle the chance 0:13:46.880 --> 0:13:49.240 and the risk management much better in trading. So I'm 0:13:49.280 --> 0:13:50.880 kind of curious to say, like, go from this and 0:13:50.920 --> 0:13:53.640 then play some poker again soon and see if see 0:13:53.640 --> 0:13:56.160 if it changes, because that is a very big difference. 0:13:56.200 --> 0:13:59.240 That that is. Uh, the biggest difference is that in chess, 0:13:59.640 --> 0:14:01.880 if you play well, um, I mean I would say 0:14:01.920 --> 0:14:05.160 probably at the time something good will happen. You might 0:14:05.160 --> 0:14:07.319 not win the games. Your opponent plays very well but 0:14:07.640 --> 0:14:10.040 you aren't gonna lose if you make, say, forty good 0:14:10.080 --> 0:14:12.439 moves in a row, and so therefore that that is 0:14:12.480 --> 0:14:15.640 a big difference. But for me, UM, I've I find 0:14:15.679 --> 0:14:18.840 that I don't have that much difficulty switching and making 0:14:19.160 --> 0:14:22.320 just straightforward decisions. UM. For me, it seems much more 0:14:22.320 --> 0:14:24.840 logical actually with trading that it does with chess in 0:14:24.840 --> 0:14:27.400 a way. Yeah, So I have to say, UM, poker 0:14:27.520 --> 0:14:30.120 is probably the analogy that we hear the most when 0:14:30.160 --> 0:14:33.440 it comes to trading. Uh. And you said you played 0:14:33.560 --> 0:14:35.240 a little bit of poker in the past. Did you 0:14:35.280 --> 0:14:38.080 find it more difficult than chess or can you kind 0:14:38.080 --> 0:14:40.120 of walk us through what your performance was like on 0:14:40.160 --> 0:14:43.440 that front. Yeah, I found a poker quite difficult. And 0:14:43.480 --> 0:14:45.600 it's for the exact reason that you would think that 0:14:45.680 --> 0:14:49.080 the trading should be difficult compared to chess, which is that, UM, 0:14:49.120 --> 0:14:50.520 I felt like I was making a lot of the 0:14:50.600 --> 0:14:53.400 right decisions more often than not, but the results were 0:14:53.520 --> 0:14:56.280 were not right. I would end up you know. I mean. 0:14:56.280 --> 0:14:58.400 The best example is when I played the World Series 0:14:58.400 --> 0:15:01.760 of Poker or the Main Event and an eleven and UM, 0:15:01.800 --> 0:15:05.160 in that event, I played tight, I played normal, normal 0:15:05.200 --> 0:15:08.040 solid poker and then at the end of the second day, 0:15:08.680 --> 0:15:10.920 and probably like the last twenty minutes, I ended up 0:15:10.960 --> 0:15:13.080 with this hand where I had kings and the other 0:15:13.120 --> 0:15:16.040 guy had a pair of eights, and uh, on the 0:15:16.040 --> 0:15:18.120 flop there was an eight and and I busted out 0:15:18.160 --> 0:15:22.520 that way despite really not doing anything anything wrong at all. Um. 0:15:22.560 --> 0:15:24.960 And that's just one example. But I think that at 0:15:24.960 --> 0:15:27.400 the time I found it very hard because again compared 0:15:27.440 --> 0:15:30.000 to chess, uh, that there is that luck. You can 0:15:30.040 --> 0:15:33.080 make all the right decisions, but then somehow you you lose, 0:15:33.120 --> 0:15:34.800 so you're all the tournament or you you know, you 0:15:35.240 --> 0:15:37.400 bust in the cash game. It's like it's a very 0:15:37.440 --> 0:15:41.400 strange feeling. Um from that standpoint. But for for me, 0:15:41.440 --> 0:15:42.960 I don't know what the difference is, but I have 0:15:43.040 --> 0:15:46.320 found with trading it's much easier for me than than 0:15:46.480 --> 0:15:48.600 than it was with poker. But of course I haven't 0:15:48.600 --> 0:15:50.480 played poker seriously in a few years, and maybe it 0:15:50.480 --> 0:15:53.680 would be an interesting experience experiment to go back to 0:15:53.800 --> 0:15:56.080 playing some poker now just to see if see if 0:15:56.120 --> 0:15:58.560 because I have this experience with trading, whether it's a 0:15:58.600 --> 0:16:00.560 little bit different. Let's take a right now for a 0:16:00.560 --> 0:16:03.440 word from our sponsor. But first we want to take 0:16:03.440 --> 0:16:05.600 a moment to let you know about something new from 0:16:05.600 --> 0:16:09.840 Bloomberg that's really cool. It's called Lens, and it is 0:16:09.880 --> 0:16:13.960 an iOS app and a Google Chrome extension, and it 0:16:14.160 --> 0:16:17.720 enables you to scan any news story on any website 0:16:18.160 --> 0:16:21.640 and instantly look up relevant news and market data from 0:16:21.640 --> 0:16:25.000 Bloomberg and other sources, all related to the companies and 0:16:25.080 --> 0:16:29.320 people you are actually reading about online. So pretty cool, right, 0:16:29.400 --> 0:16:31.960 So starting right now with the app or with the 0:16:32.040 --> 0:16:34.560 Chrome extension, and let's say you're on the web and 0:16:34.560 --> 0:16:37.520 you go to the New York Times and you read 0:16:37.520 --> 0:16:41.000 an article about Facebook. You can instantly pull up all 0:16:41.080 --> 0:16:45.080 of Bloomberg's data about Facebook, pull up relevant articles. It's 0:16:45.120 --> 0:16:49.120 basically a way to take the complete power of Bloomberg, 0:16:49.200 --> 0:16:53.440 the terminal, the database, and have it overlay your entire 0:16:53.520 --> 0:16:56.280 consumption of news around the world and around the web. 0:16:56.640 --> 0:16:59.680 Right and you can learn more about it at Bloomberg, 0:17:00.160 --> 0:17:06.560 Calm Forward, slash Lens. But knowledge to work and grow 0:17:06.600 --> 0:17:10.240 your business with c i T from transportation to healthcare 0:17:10.320 --> 0:17:13.840 to manufacturing. C i T offers commercial lending, leasing, and 0:17:13.920 --> 0:17:17.840 treasury management services for small and middle market businesses. Learn 0:17:17.880 --> 0:17:20.760 more at c i T dot com. Put knowledge to work, 0:17:25.760 --> 0:17:29.600 and we're back with Karu Nakamura, one of the top 0:17:29.760 --> 0:17:33.480 chess players in the entire world and therefore obviously also 0:17:33.520 --> 0:17:36.359 one of the top players in the US. We're also 0:17:36.480 --> 0:17:41.520 talking about his experience having played poker, his experience and 0:17:41.600 --> 0:17:45.720 options trading car The obvious sort of follow up is 0:17:45.760 --> 0:17:50.119 that all of these areas, whether it's poker, trading, chess, 0:17:50.640 --> 0:17:54.840 the nature of active participation has changed dramatically due to 0:17:55.280 --> 0:17:59.040 the use of computers artificial technology the top. It was 0:17:59.080 --> 0:18:01.440 probably a point or no one imagined that the top 0:18:01.520 --> 0:18:04.800 chess computers could compete with the top humans. Now that 0:18:04.920 --> 0:18:10.000 question has been changed. Obviously, computers have completely changed the 0:18:10.000 --> 0:18:13.439 way markets trade or you know, changed the balance of um, 0:18:13.480 --> 0:18:16.560 how humans interact with it. Computers are getting better and 0:18:16.600 --> 0:18:20.720 better all the time at a poker as well. Let's 0:18:21.200 --> 0:18:24.320 talk about this a little bit in chess. How have 0:18:24.760 --> 0:18:27.520 computers in your view changed the game? How have they 0:18:27.600 --> 0:18:32.160 changed your preparation? How do you see them having influenced it? Basically, 0:18:32.320 --> 0:18:35.320 I think the main thing that's changed with computers UM 0:18:35.440 --> 0:18:38.160 is that at this point in time, because it becomes 0:18:38.200 --> 0:18:40.960 so strong, you just automatically assume that they're right. So, 0:18:41.040 --> 0:18:43.320 for example, if you put a certain chess position and 0:18:43.400 --> 0:18:46.080 you have one of the computer engines analyzing it, you 0:18:46.160 --> 0:18:48.959 just trust the evaluation what it says. You know, white's 0:18:49.000 --> 0:18:52.000 whites better, whites winning, or the position is completely even, 0:18:52.200 --> 0:18:55.080 you trust it without without a second thought. Whereas in 0:18:55.080 --> 0:18:57.880 in the early days, UM saying the nineties, for example, 0:18:58.119 --> 0:19:00.680 computers could come up with evaluations were wrong and a 0:19:00.800 --> 0:19:03.600 human would still be right. A human wouldn't know the 0:19:03.720 --> 0:19:07.720 understand the position better, whereas now, UM, that's not the case. 0:19:07.760 --> 0:19:10.400 You just it's just flat out the computer's right, you're wrong. 0:19:10.440 --> 0:19:13.280 You trust what it says, period, end of story. And 0:19:13.320 --> 0:19:16.200 so because of that, Um, one of the main things 0:19:16.280 --> 0:19:18.720 that that has changed is there are a lot of 0:19:18.720 --> 0:19:21.800 positions which in the past you would have thought one side, 0:19:21.840 --> 0:19:24.440 the way they're playing is very unusual, it's dubious, it's 0:19:24.440 --> 0:19:28.639 not quite correct, it's not correct play. And because of computers, 0:19:28.640 --> 0:19:31.200 if you see a position now where there's some strange moves, 0:19:31.520 --> 0:19:34.560 the computer says it's completely fine, and you just you 0:19:34.600 --> 0:19:37.640 believe that it's not. It's not like before, whereas if 0:19:37.680 --> 0:19:40.280 I played some position against a cast brought, for example, 0:19:40.280 --> 0:19:42.560 he would just you know, he would just go, that's 0:19:42.600 --> 0:19:44.399 not good. You don't know what you're doing, your complete 0:19:44.440 --> 0:19:47.760 pots or whereas now because of the computer. Uh, he 0:19:47.800 --> 0:19:50.679 couldn't really say that, because the computer just it understands 0:19:50.760 --> 0:19:53.480 chest so so much better. And basically the main thing 0:19:53.600 --> 0:19:56.280 is that now almost any position in the game of chess, 0:19:56.680 --> 0:19:59.480 if you find the right moves, is probably okay unless 0:19:59.480 --> 0:20:01.800 you're just complete losing. There always are going to be 0:20:02.000 --> 0:20:06.720 defensive resources. So Joe and I have talked about this 0:20:06.840 --> 0:20:09.239 a number of times now. But in markets, you know, 0:20:09.280 --> 0:20:12.639 the rise of machines as well as passive investing has 0:20:13.240 --> 0:20:15.800 I think it's fair to say, given way to a 0:20:16.000 --> 0:20:19.919 sense or maybe an existential crisis for fund managers, like 0:20:20.040 --> 0:20:22.720 there's just a sense that you can never beat the 0:20:22.760 --> 0:20:25.560 market or the machines now. Um So when it comes 0:20:25.600 --> 0:20:31.399 to chess and computers, does the rise of computers just 0:20:31.520 --> 0:20:35.480 make playing chess less fun? Like knowing that a computer 0:20:35.760 --> 0:20:38.840 is all powerful and always has the right decision, does 0:20:38.920 --> 0:20:42.280 that make the game less enjoyable for you? It does 0:20:42.320 --> 0:20:46.000 at times. I think. Another another big thing that's happened 0:20:46.000 --> 0:20:49.440 in chess as you have these huge databases with millions 0:20:49.440 --> 0:20:51.359 and millions of games as well, So it's not just 0:20:51.480 --> 0:20:55.200