How the Gambler Wins in Poker and Life

 
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By Miles Clyne

Annie Duke, former World Series of Poker champion and Decision Strategist, talks about her process in making and evaluating decisions. The notes are my summary of part of her conversation with Peter Attia on his podcast.  I’d encourage everyone to listen to the entire podcast.

Annie Duke’s Framework for making good decisions:

Forecasting

If there is a goal you’d like to reach how do you decide how to accomplish it?  Consider all the factors to the decisions you need to make before starting the goal and as you progress what are the factors that are within your control; IE. skill-based decisions? What is out of your control? Do you need luck on your side to ensure a positive outcome?

Backcasting

You had a year to complete a goal. The day after the goal is completed ask yourself; how did you achieve this? Was there luck involved, and how did luck impact the outcome either positively or negatively?

Premortem

If your goal wasn’t achieved in the time frame set out, the day after its due date ask, “why did the goal fail to be completed on time?” Did you rely too much on luck, or were there factors that were in your control that you didn’t consider in your forecasting that worked against you?

Luck

Is it in or out of your control? IE: you need X amount of dollars to complete a task, you have the money set aside and you end up needing some of the money for an emergency and now can’t complete your goal.  Was this bad luck or bad planning? If it was bad luck, could you have created a hedge against these variables to limit the downside risk of bad luck? Planning for bad luck ahead of time gives you the luxury of planning in a calm state verses a panic state of mind.

The more often you apply this logic, the easier it becomes to ask the right questions and make better decisions. Understanding the risks as well as the opportunities in any situation also gives you leverage from both an emotional and financial perspective.  With many opportunities, you may be seeing what others have already passed on; therefore, you are getting the opportunity because everybody else asked the right questions before you.

David Robinson, hedge fund manager, stated that rookies see opportunity everywhere, experienced people see them occasionally. This doesn’t mean you stop looking, it means you become more objective, an inherent benefit of better decision making.

Here is to a good life and good decisions, cheers.