In an upcoming post on Huffington Post, I compare the business decisions of companies like Microsoft, Google and Facebook with those that I made at the blackjack table. Specifically, I talk about the difficulty of splitting 10s.
Here’s the passage from my book, “The House Advantage” where I discuss when and why you split 10s.
The math behind splitting 10s is relatively simple. With a 20 against a dealer’s 6, you have roughly an 85 percent chance to win the hand. So your expected value is 0.70 (0.85-0.15) times whatever you have bet, in this case $8,000. My expected value of standing on the 20 was $5,600.
If you split the 10s, putting another $8,000 down on the table, your new expected value is the sum of the expected value of each new hand. Starting with a 10 against the dealer’s 6, you will win roughly 64 percent of the time. So in this case your expected value is simply .28 (.64-.36) times $16,000 (the sum of the two bets). My expected value of splitting the 10s was $4,480.
These numbers apply to normal conditions, facing a deck with a standard ratio of high cards to low cards remaining. However, when the deck gets rich in high cards, your odds of winning in each scenario–splitting versus standing–both increase. And the more the deck gets skewed toward high cards remaining the more the probability of winning in each scenario increases.
Let’s take the extreme case when you know there are only high cards remaining in the deck. If you stand your 20 you will have pretty close to a 100 percent chance to win and your expected value will be $8,000. But if you split your 10s you will also have close to a 100 percent chance to win and your expected value will be close to $16,000, two times your expected value for standing.
Of course this is merely a theoretical ideal scenario but it illustrates the value of splitting 10s. In a favorable situation it allows you to put more money on the table and therefore win more money.
Splitting 10s is something called a “numbers play” and is something you only do once you have mastered all other aspects of card counting. Numbers plays are deviations to basic strategy based on the count at your table.
In my new book, The House Advantage: Playing the Odds to Win Big in Business”, I revisit an age old argument – does the hot hand exist in basketball? In other words are there periods of time during a basketball game where a player suddenly has a higher than normal chance of making a shot or are these streaks just an example of random variance – similar to flipping a coin 10 times and coming up with heads all 10 times.
It is a fascinating debate where those in the statistics camp believe that there is no such thing as a hot hand and those that play they game think the stats people are full of academic manure.
While this argument is an interesting one it really doesn’t have a definitive “solution”. However as I explored this debate I came across some more practical, more actionable basketball strategies.
excerpt from “The House Advantage”
The “two-for-one strategy” describes the optimal strategy at the end of each quarter in an NBA game. The NBA has a 24-second shot clock, meaning teams must shoot within 24 seconds of receiving the ball or lose possession and the ball is awarded to the other team. For the most part the shot clock does not have a major impact during the course of the game as NBA teams often shoot well before the 24 seconds have expired. But at the end of each quarter there is an opportunity to use the shot clock to your advantage. Imagine receiving the ball with 45 seconds left in the quarter. If you use all of your allotted 24 seconds, then you will leave the other team with 20 seconds left and they will be able to run the clock out, leaving you no more opportunities for that quarter.
But instead, if you shoot the ball with more than 25 seconds left, you are ensuring that unless you fail to get the defensive rebound, you will get the ball at least one more time that quarter. This is the two-for-one strategy. You are ensuring yourself two possessions to the other team’s one.
It’s not that simple, however. If you shoot the ball too early, say with 38 seconds left, you are giving your opponent a chance to do a two-for-one to you. So how do you know exactly when to shoot? Your gut would tell you that it is somewhere more than 30 but less than 40 seconds. But is your gut enough?
In the book, I detail some simple research which shows that 33 seconds is the optimal time when teams should shoot the ball to ensure another possession while not giving the other team a chance to do the two-for-one back to you. It’s not earth shattering stuff but it is an interesting thing to think about as you watch an NBA game.
In a conversation with Houston Rockets GM Daryl Morey, Morey stated that when he sees teams properly employing the two-for-one strategy he knows that they have numbers people making an impact in their organization.
I had this statement and our research in mind as I watched the NBA playoffs. As I watched the game I marveled at how at the end of each quarter the Celtics constantly went for the two-for-ones while the Lakers largely ignored clock management and took the shot they wanted when they wanted.
Looking at the play by play data only once out of 12 times did the Celtics when given an opportunity for a two-for-one, shoot the ball with less than 30 seconds on the clock i.e. each time they gave themselves enough time to get another possession.
In contrast, the Lakers given eight opportunities for the two-for-one, only attempted it three times.
In the end, we all know what happened. The Lakers superior talent and legendary coach won out over the Celtics aging veterans (a sad moment for me as a Celtics fan) and less weathered coaching staff. Yet in examining the reasons why this happened, perhaps Phil Jackson was less the reason than most would think.
Jackson’s legacy is certainly unquestioned but his championships have come with some amazing talent – the kind of talent that can overcome a couple of extra possessions here and there.
We never really know how good a coach is. As fans we don’t sit in huddles and don’t go to practice. All we can see is what happens on the court. Ignoring a chance to get an extra possession at the end of a quarter seems like a simple mistake, yet Jackson’s team did it many times in the finals.
Again, you can’t argue with results but you can argue with the methods. And there certainly is a hole in the Lakers’ methods.
July 6 10 AM – 1 PM ESPN Radio “The Herd”
July 7 7:10 AM PDT “Money Matters” Business Talk Radio Network
July 8 Noon CDT University Club, Chicago
July 8 7 PM CDT Barbara’s Bookstore, 1218 South Halsted St., Chicago
July 9 11:30 AM CDT Union League Club Chicago
July 12 Noon EST WGBH-FM “Emily Rooney Show” [Boston]
July 12 5:30 PM Altman Vilandrie, Boston
July 13 Noon Prudential Center Barnes & Nobles, Boston
July 14 7:45 AM MSNBC Morning Joe
July 14 TBA Podcast and video interviews on TheStreet.com
July 14 4:30 PM EST Bloomberg TV “Street Smart”
July 14 1 PM EST Borders Wall Street, NYC
July 15 Noon EST 92nd Street Y,Tribeca
July 15 2:3O PM EST Bloomberg Radio “The Hays Advantage”
July 16 TBA CNBC Power Lunch
July 20 7 PM PST Books Inc, 1760 Fourth Street, Berkeley, CA
July 21 3 PM PST Facebook HQ
July 21 6 PM PST Book Passage, 1 Ferry Building, #42, San Francisco, CA
July 22 7:30 PM PST Kepler’s 1010 El Camino Real, Menlo Park, CA
July 26 6:30 PM PST Commonwealth Club, SF, CA
July 27 12 PM PST Google, Mountain View
July 29 1:30 PM PST Microsoft HQ, Seattle
Aug 4 7 PM PST Strike 3 Charity Event
Since my days as a card counter, I’ve struggled to find something in the “real world” as predictable as blackjack. As long as you have a large enough bankroll and execute your strategy correctly, we always won at blackjack (not every hand or even every trip but over the long haul)
The same cannot be true of other disciplines. In finance, irrational human behavior can cause the demise of the best statistical model. In medicine, imperfect clinical studies can prove irrelevant to the patient at hand. And in poker, the best played hand can fall prey to the schmuck sucking out on you on the river.
Even sports, where many “statistical experts” ply their trade successfully, falls short of the perfection of blackjack. For the last four years, I have competed against many of these “statistical experts” in the NBA Stat Geek Smackdown. This contest sponsored by ESPN super blogger, Henry Abbott, asks experts to pick the outcome of each NBA playoff series.
Each year I have finished near the top of the standings but until this year was yet to finish at the top. In previous years, I have used a pretty traditional analytical approach. Evaluating a few key season long metrics, examining Vegas odds and then incorporating any personnel changes caused by trades or injuries, I’ve made fairly traditional picks.
But this year I added a new weapon to my picking arsenal – intuition. See as a trained card counter, I’ve never believed in intuition in the classical sense. There’s no “feeling” that told me to split tens because the dealer was going to bust and no “hunch” that told me a four was coming so I should hit my seventeen. Every decision I made at the blackjack table was grounded on science.
No “statistical expert” worth his weight would tell you to use classic intuition, defined as “acquiring knowledge without inference or use of reason”. Yet many successful business leaders believe in intuition or “blinking”.
It was this dilemma I attempted to tackle when writing my book, The House Advantage (due out July 6th). My first conversation on this topic with poker superstar Andy Bloch helped me discover a new type of intuition.
Bloch is one of the most successful poker players of the last decade. He is one of the most educated having received two electrical engineering degrees from MIT and a JD from Harvard. He was also one of my teammates on the MIT blackjack team. Since Bloch no longer lives in the perfect world of blackjack, he seemed like the perfect person to help me understand the role of intuition in something imperfect like poker.
(excerpt from The House Advantage)
So I decided to just outright ask him (Bloch) the question that was consuming me. “How do you balance intuition with math when playing poker?”
Bloch paused for a second and then started by saying, “I use intuition but I’m careful about it. If you listen to your intuition too much, you start listening to things that aren’t really intuition. Like having pocket 10’s and saying, I think there’s going to be a 10 on the flop, so I’m going to go all in. That’s not intuition. That’s just a guess.”
“You have to use the right intuition – intuition that is based on some kind of fact. Like if you notice an opponent’s tell that makes you call in a situation that you wouldn’t normally. You might not be conscious of exactly why you make that call but your intuition was based on some kind of fact,” Bloch concludes.
This was certainly a different type of intuition then most people talk about. Bloch continued explaining his version of intuition, “I use intuition when I face a situation that I’ve never seen before – a situation that I haven’t had a chance to model.”
So in Bloch’s world intuition was simply a less documented, less rigorous form of statistical analysis – a necessary addition to a world where past data may not tell the whole story.
It was this new type of intuition I used when evaluating the NBA playoffs this year. And when the Celtics nearly swept the Miami Heat, I started to wonder if perhaps the season long numbers didn’t apply to the Celtics.
I started to look for kernels that perhaps this current version of the Celtics was better than the one that stumbled into the playoffs as the fourth seed. Certainly they were healthier than they had been during the entirety of the season. Their outstanding performance on the road anecdotally told the story of a veteran team that could bring it when they wanted to. In their nine losses to the teams seeded above them (Magic, Hawks, Cavs), they were ahead at halftime in six of those games. They either tired or failed to execute down the stretch but they were right there in many of those games. Finally, I wondered if the Celtics really cared if they were seeded third or fourth in the playoffs. Their goal was never to reach the conference finals. Their only goal was a championship and there was little difference in a third or fourth seed in accomplishing that goal.
Of course, none of this would qualify as “statistical proof” but it certainly gave me the confidence to employ this new “intuition” and in the second round I was the only “expert” to pick the Celtics over the Cavs (in six games) and in the next round, only Henry’s mother and I picked the Celtics over the Magic (also in six games).
This success means very little about my prowess over the rest of the field. In fact it likely means that I’m less of a “statistical expert” than the others since I was willing to go against what most of the numbers were telling me. But perhaps that’s the important lesson. Data and statistics are incredibly useful in predicting the future, yet in areas like sports where there the relevant data can be limited it is important to be flexible in your reasoning process. That flexibility is what helped me win the Smackdown this year.
So now the Celtics again enter the finals as an underdog to the Lakers. And most season long metrics would say the Lakers will win this thing in five or six games. Yet my “intuition” is telling me differently and I’m more focused on two things.
1) The Celtics are more like their 2008 team than their 2010 team.
2) The Lakers are more like their 2008 team than their 2009 team.
I’m not sure how healthy Bynum is and without him we’ve seen how this physical, tall, Celtics team can play with the Lakers. Also, I like the Celtics to force outside shots from the likes of Artest and Odom. Shots that likely won’t fall as often as they have so far this playoffs. And shots that would better served going to Kobe.
But in the end, all the analysis and stats mean little in a seven game series that will likely come down to who shoots a higher percentage from three point range. Good luck trying to predict that.
My prediction… Celtics in seven!
As I sat last night, riveted to game five of the Suns/Lakers series, I could not get the idea out of my head that this Lakers team may be the most utterly unlikeable team that I’ve ever seen. Full disclosure, I’m a Celtics fan and I’m rooting for Steve Nash who I’ve done charity work with. But watching Derek Fisher flop like a soccer player or Gasol and Kobe complain every time they miss a shot leaves me wanting to see the purple and yellow go down.
I laughed as Ron Artest took two terrible shots within five seconds helping the Suns mount an unbelievable comeback. You have Kobe Bryant, Pau Gasol and a hot Derek Fisher on your team and you, Ron Artest, decide to take not one but two outside shots.
Of course, all was forgotten when Artest scored the game winner off a Kobe Bryant airball but after the game Artest was not remorseful about his insanely stupid shots basically saying that if he was in the same situation again, he would still have taken those shots because “a player has to play.”
As maddening as this unfair end was, it was fitting for a league that produces an incredibly unlikeable product yet somehow always manages to deliver on entertainment value.
To be fair, I’m sure many people feel the same way about my beloved Celtics that I do about the evil Lakers. Paul Pierce’s flair for unneeded drama, Kendrick Perkins well documented tantrums and Kevin Garnett’s bordering psychosis certainly do not endear themselves to any non-Celtics fans.
It really is a shame because what these players do on the court is nothing short of amazing. But the whining, complaining and flopping has grown too tiresome.
And the sad part is, it doesn’t have to be like this. It is pretty simple to fix – simply implement a no tolerance policy for whining. The minute Kobe throws his arms up in anger, technical. The instant Gasol turns around to complain, technical. And as soon as Kendrick Perkins goes into one of his long walks, technical.
It works in all levels of amateur sports where athletes know that they cannot argue with refs and yes the dynamic at the pro level is considerably different but the main problem is not how much money they players are making, it’s that they know they can get away with it.
That is what is so maddening about Perkins second technical in game five. He was doing nothing different than he does after almost every foul called on him. Something no different than what Kobe or Pau does after every play they are involved with that they don’t agree with. Yet at that moment the referee considered Perkins sins egregious.
The NBA has many arbitrary rules that players simply accept because they know they have no choice. For example, players know they cannot leave their bench area during a fight. While yes, they do violate this at times, in general this is something they abide by and accept.
It really is just an expectation level and if the NBA did a better job of setting expectations, they’d have a much better product. Imagine Kobe knows that the minute he starts complaining he runs the risk of getting a technical. He’d certainly think twice about it and would likely shut his big trap. Right now he knows he’s got to go pretty far before any ref would dream of teeing him up.
It’s like in baseball where managers know they can’t argue about balls and strikes. They still do it from time to time but when they get ejected they absolutely know they deserved it.
The NBA could benefit by having a similar edict. Players are not allowed to argue fouls – period.
Do you think anyone would really miss seeing their favorite star complain to the refs?
So now that we sold Citizen Sports to Yahoo and my day to day duties at Citizen Sports are done, I’ll hopefully have more time to blog.
I’ve been doing a ton of speaking for some amazing companies and groups. Also, I’ve been doing my best as an NBA prognosticator. I was the only “expert” to pick the Celts over the Cavs (which they did in exactly six as I predicted) and now I’m the only “expert” (save Henry’s mom) who has the Celts over the Magic. It won’t be as easy as it was in game one but the Celts do look like they are much more like the team of 2008 than that of the second half of 2010. If Sheed and Perk can continue to cover Howard one on one they have a good shot to pull off the upset.
As for the other NBA series, many experts are giving the Suns a fighting chance and most analytical systems have the Suns as the top team from the second half of the 2010 season. So I’d have to say the Suns at +300 for the series is an appealing bet. I have the Lakers in seven in the Stat Geek Smackdown, but that prediction wreaks of someone not wanting to take a stand.
Just got back from Barcelona where I had an amazing time meeting YPO-WPO members and amazing speakers.
Two highlights were Andre Norman, who has a simply amazing story. A reformed ex-con Andre can motivate anyone including prisoners on death row. Check out his info.
The second was Ankit Fadia, who wrote his first book at the age of 14 and by the age of 16 was helping the US government hack Al-Quaeda emails after 9/11.
Again, thanks to all for making the Barcelona trip amazing… Maybe next time I’ll get to see the city.
As I sit here watching hours of Super Bowl post-game coverage, basking in the glory of the Saints win, I thought I’d write some thoughts on the game that not a lot of people are talking about.
First of all, Sean Payton’s gutsy decision to onside kick at the beginning of the second half may have been the play of the game — that sentiment is inarguable. But what no one in mainstream media is talking about is how the numbers show that if the Saints try that 10 times in that exact situation they would actually recover the ball six times — more than half of the time. The analysis is here if you don’t believe me. I just think it is important to highlight how deficient mainstream media is in giving fans all the facts. We can only hear plaudits of risky and gutsy so many times before it would be nice to have some hard facts provide color on the situation.
Jim Caldwell was over his head in this game. The Caldwell story is a nice one but the reality is that Peyton Manning was the reason that this team almost went undefeated — Caldwell was merely a caretaker. While Sean Payton was making the right call going for it on 4th down, trying onside kicks, and making the right challenges, poor Caldwell was making his 42 year old kicker try a 51 yard FG, mismanaging timeouts and playing things way to close to the vest when he should have been going for the jugular (at the end of the 1st half).
What’s interesting about Payton’s decision to go for it on 4th and Goal at the two yard line is how he likely knew things would play out if he didn’t get the touchdown. Payton knew that by giving the Colts the ball at their own one yard line, he was essentially taking the ball out of Manning’s hands. He knew that there was no way that conservative Caldwell would actually let Manning throw the ball in that situation so essentially he was ensuring that at worst he would go into the locker room down seven points. If he kicks that field goal and then kicks off, there’s a good chance Manning has a chance to get another TD before the end of the half — the worst case scenario. Poor Caldwell played right into Payton’s hands.
Garret Hartley was my MVP. Yes I know Brees was really the MVP and as I mentioned before the game he may even be better than Manning. But Hartley’s three 40+ FG’s were a Super Bowl first and without them the Saints may have not been in a position for Brees’ heroics. Hartley’s kick in OT against the Vikings was true and his three kicks in the Super Bowl were some of the most no doubt, clutch kicks I have ever seen. Hartley was amazing.
Finally, as I listen to my nemesis Tom Jackson talk about Sean Payton’s onside kick decision, I can’t help but wonder what he’d be saying if that were the Patriots and Bill Belichick trying that onside kick. Even worse, I can’t imagine what he would have said if it had been unsuccessful. Again, it would be nice if someone on that ESPN set had something intelligent to say about the decision rather than commenting on its result.
Nevertheless, a great game, one where at least the good guys or rather the smart guys won.
On December 29, 2009, I made the statement that the Colts would not win Super Bowl XLIV. My reasoning was that their gutless decision to rest players, rather than go for the undefeated season, would cause them to be less than sharp in the playoffs. But now, with the Colts looking better than ever and a prohibitive favorite to beat the Saints, is it time for me to eat my words?
Yes, the Colts have dismantled both the Ravens and the Jets, giving up only 20 points while scoring 50. And yes, the Saints have looked pedestrian, needing five turnovers by the Vikings to escape with a three-point overtime win. But I stand by my words — the Colts will not win the Super Bowl.
And here is why:
1) The Colts cannot run the ball and the Saints can. With both offenses possessing incredibly prolific passing attacks, both defenses will be geared up to stop the pass and therefore will be susceptible to the rush. Add in the fact that both offenses are looking to keep the opposing offense off the field and the running game becomes even more important. In case you don’t believe that the Saints’ running game is better than the Colts, check out FootballOutsiders which has the Saints ranked 1st in rushing offense while the Colts are ranked 22nd.
2) Peyton Manning is good, but Drew Brees may be better. Sacrilege, you say. Yes, Manning is one of the best quarterbacks of all time and is incredibly funny in every commercial he does and may or may not be the next Tiger Woods but Brees arguably had a better season this year than Manning did. Brees had more TDs, fewer interceptions, a better completion percentage (highest ever), a higher yards per attempt and even a higher QB rating (which we won’t even dignify with an explanation, I’ll leave that for my book). Most of the numbers are close but the reality is that Brees’ performance this season was better than Manning’s.
3) Injuries. Yes, much has been made about Dwight Freeney’s ankle, and it could be a huge factor (the point spread has dropped a full point since media day, where most people finally got to see Freeney limping around) but the injuries that I’m focused on are the ones that have healed. New Orleans was a better than average defensive team through the first nine weeks of the season, but top cornerback Jabari Greer missed the next seven games while Tracy Porter (the other starting CB) was injured a week later, missing four games and being limited in the other three. In those seven games, the Saints’ passing defense fell apart. Both have since returned and will play in the Super Bowl, giving the Saints an above average defense once again.
What does this all mean — should you take the Saints plus the points? If I were a betting man, I would, because at worst, this is an even game. But I’ll go one step further and stand behind my statement that the Colts will not win the Super Bowl.
Saints in an upset.
For you gambling folk, I decided to include a couple fun proposition bets.
The first one is courtesy of my friend Mark Kamal…
Time it takes Carrie Underwood to sing the National Anthem: UNDER 1 minutes, 42 seconds (-145)
I was able to find four performances by Underwood singing the national anthem: the SEA/CAR playoff game in January 2006, the World Series game 3 in 2007, the 2006 MLB all-star game, and a 2005 NBA game. Her times in each of those: 1:39, 1:34, 1:38, and 1:42. The key seems to be her lack of lengthening out the last verse, specifically the word “free”, so I will take the under.
These are my favorites:
Pierre Thomas to rush for more yards than Joseph Addai (+125)
Addai is banged up and this Indy team cannot run the ball. They haven’t been able to all season, and it’s highly unlikely that they suddenly figured it all out over the bye week. Add in the fact that Addai is likely to be spelled considerably by Donald Brown and Mike Hart. As far as Thomas goes, the Saints are going to need to establish the run to have any chance here; Thomas is by far their best between-the-tackle runner. Look for him to get between 15-20 carries and grind out 80-90 yards. I don’t think Addai gets there.
Pierre Garcon under 62.5 total receiving yards (+110)
A bit of an overreaction to last week’s outing, where Garcon produced 151 receiving yards. But that may have had something to do with the guy covering Reggie Wayne. Garcon has only gone over 62.5 yards six out of 16 times this season (I threw out the two games where the Colts were resting starters). With the number of weapons the Colts have it’s a crapshoot who is going to get the targets and I’ll take my chances getting odds to say that Peyton will spread the ball to Addai, Collie, Wayne, Garcon and Clark pretty evenly this game.
Pierre Garcon over 10.5 yards first reception (-125)
I don’t see the Colts running a lot of underneath stuff for Garcon — especially early in the game — and with Garcon’s average of over 16 yards per catch, this seems like a good gamble (even though you are giving up odds here).