Gambling Loss Quotes

A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.

But depression wasn't the word. This was a plunge encompassing sorrow and revulsion far beyond the personal: a sick, drenching nausea at all humanity and human endeavor from the dawn of time. The writhing loathsomeness of the biological order. Old age, sickness, death. No escape for anyone. Even the beautiful ones were like soft fruit about to spoil. And yet somehow people still kept fucking and breeding and popping out new fodder for the grave, producing more and more new beings to suffer like this was some kind of redemptive, or good, or even somehow morally admirable thing: dragging more innocent creatures into the lose-lose game. Squirming babies and plodding, complacent, hormone-drugged moms. Oh, isn't he cute? Awww. Kids shouting and skidding in the playground with no idea what future Hells await them: boring jobs and ruinous mortgages and bad marriages and hair loss and hip replacements and lonely cups of coffee in an empty house and a colostomy bag at the hospital. Most people seemed satisfied with the thin decorative glaze and the artful stage lighting that sometimes, made the bedrock atrocity of the human predicament look somewhat more mysterious or less abhorrent. People gambled and golfed and planted gardens and traded stocks and had sex and bought new cars and practiced yoga and worked and prayed and redecorated their homes and got worked up over the news and fussed over their children and gossiped about their neighbors and pored over restaurant reviews and founded charitable organizations and supported political candidates and attended the U.S. Open and dined and travelled and distracted themselves with all kinds of gadgets and devices, flooding themselves incessantly with information and texts and communication and entertainment from every direction to try to make themselves forget it: where we were, what we were. But in a strong light there was no good spin you could put on it. It was rotten from top to bottom.

that is the thing about selfish people. they gamble entire beings. entire souls to please their own. one second they are holding you like the world in their lap and the next they have belittled you to a mere picture. a moment. something of the past. one second. they swallow you up and whisper they want to spend the rest of their life with you. but the moment they sense fear. they are already halfway out the door. without having the nerve to let you go with grace. as if the human heart means that little to them. and after all this. after all of the taking. the nerve. isn't it sad and funny how people have more guts these days to undress you with their fingers than they do pick up the phone and call. apologize. for the loss. and this is how you lose her. - selfish

One always has to be willing to lose to be able to win... in battle and in life. I wonder. Are you willing to lose, Rayla?

I can never gain something without losing everything I had before.

most beautiful people we have known are those who have known defeat, known suffering, known struggle, known loss, and have found their way out of the depths. These persons have an appreciation, sensitivity, and an understanding of life that fills them with compassion, gentleness, and a deep loving concern. Beautiful people do not just happen.” Elizabeth Kubler Ross

Chuang-tzu once told a story about two persons who both lost a sheep. One person got very depressed and lost himself in drinking, sex, and gambling to try to forget this misfortune. The other person decided that this would be an excellent chance for him to study the classics and quietly observe the subtleties of nature. Both men experience the same misfortune, but one man lost himself because he was too attached to the experience of loss, while the other found himself because he was able to let go of gain and loss.

Letting go is not about giving up, being lazy, or sacrificing yourself... Letting go doesn't have to mean losing; it can be about coming into a new, open, clean space from which you can create.

I never advise friends to put money in anything,. said Danny. 'It's a no-win situation - if they make a profit they forget that it was you who recommended it, and if they make a loss they never stop reminding you. My only advise would be not to gamble what you can't afford, and never to risk an amount that might cause you to lose a night's sleep

For instance, suppose you offer somebody a choice: They can flip a coin to win $200 for heads and nothing for tails, or they can skip the toss and collect $100 immediately. Most people, researchers have found, will take the sure thing. Now alter the game: They can flip a coin to lose $200 for heads and nothing for tails, or they can skip the toss and pay $100 immediately. Most people will take the gamble. To the imagined rational man, the two games are mirror images; the choice to gamble or not should be the same in both. But to a real, irrational man, who feels differently about loss than gain, the two games are very different. The outcomes are different, and sublimely irrational.

Sometimes you have to risk life, in order to live, and gamble death, to sacrifice life.

I smoked one too many cigarettes- I heard one too many lies- Gambled on too many bets- And lost it all to this life.

He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.

The desire to avoid loss ran deep, and expressed itself most clearly when the gamble came with the possibility of both loss and gain. That is, when it was like most gambles in life. To get most people to flip a coin for a hundred bucks, you had to offer them far better than even odds. If they were going to lose $100 if the coin landed on heads, they would need to win $200 if it landed on tails. To get them to flip a coin for ten thousand bucks, you had to offer them even better odds than you offered them for flipping it for a hundred. “The greater sensitivity to negative rather than positive changes is not specific to monetary outcomes,” wrote Amos and Danny. “It reflects a general property of the human organism as a pleasure machine. For most people, the happiness involved in receiving a desirable object is smaller than the unhappiness involved in losing the same object.” It wasn’t hard to imagine why this might be—a heightened sensitivity to pain was helpful to survival. “Happy species endowed with infinite appreciation of pleasures and low sensitivity to pain would probably not survive the evolutionary battle,” they wrote.

You never get poor by taking a profit." It would follow that cutting your losses is also a good idea, but investors hate to take losses, because, tax considerations aside, a loss taken is an acknowledgment of error. Loss-aversion combined with ego leads investors to gamble by clinging to their mistakes in the fond hope that some day the market will vindicate their judgment and make them whole.

A man left home in morning with 1 Rupee. He gambled with it and made millions. Then lost them all. He returned home in evening empty handed. His wife is clueless why loss of just 1 Rupee has drowned his husband in so much depression that he is not speaking a word. This is the illusion or Maya.

It's not luck - there's probably no such thing as luck, and if there is you can't depend on it. All you can do is play the percentages, play your best game, and when the critical bet comes - in every money game there is always a critical bet - you hold your stomach tight and you push hard. That's the clutch. And that's where your born loser loses

The asymmetry has been confirmed in the lab by showing that people will take a bigger gamble to avoid a sure loss than to improve on a sure gain,

The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you you hope that every day will be the last day and you lose more than you should had you not listened to hope to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out too soon. Fear keeps you from making as much money as you ought to. The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.

Many unfortunate human situations unfold [. . .] where people who face bad options take desperate gambles, accepting a high probability of making things worse in exchange for a small hope of avoiding a large loss. The thought of accepting the large sure loss is too painful, and the hope of complete relief is too enticing, to make the sensible decision that it is time to cut one's losses.

Now, it has been independently shown that people hate to lose something more than they enjoy gaining it. For example, they don't mind paying for something with a credit card even when told there is a discount for cash, but they hate paying the same amount if they are told there is a surcharge for using credit. As a result, people will often refuse to gamble for an expected profit (they turn down bets such as "Heads, you win $120; tails, you pay $100), but they will gamble to avoid an expected loss (such as "Heads, you no longer owe $120; tails, you now owe an additional $100"). (This kind of behavior drives economists crazy, but is avidly studied by investment firms hoping to turn it to their advantage.) The combination of people's loss aversion with the effects of framing explains the paradoxical result: the "gain" metaphor made the doctors risk-averse; the "loss" metaphor made them gamblers.

The judge got down on his knees, and he prayed to God, he, Jemubhai Popatlal the agnostic, who had made a long hard journey to jettison his family’s prayers; he who had refused to throw the coconut into the water and bless his own voyage all those years ago on the deck of the SS Strath-naver. "If you return Mutt, I will acknowledge you in public, I will never deny you again, I will tell the world that I believe in you – you – if you return Mutt – " Then he got up. He was undoing his education, retreating to the superstitious man making bargains, offering sacrifices, gambling with fate, cajoling, daring whatever was out there - Show me if you exist! Or else I will know you are nothing. Nothing! Nothing! – taunting it.

This mindset, known as loss aversion, the sunk-cost fallacy, and throwing good money after bad, is patently irrational, but it is surprisingly pervasive in human decision-making.65 People stay in an abusive marriage because of the years they have already put into it, or sit through a bad movie because they have already paid for the ticket, or try to reverse a gambling loss by doubling their next bet, or pour money into a boondoggle because they’ve already poured so much money into it. Though psychologists don’t fully understand why people are suckers for sunk costs, a common explanation is that it signals a public commitment. The person is announcing: “When I make a decision, I’m not so weak, stupid, or indecisive that I can be easily talked out of it.” In a contest of resolve like an attrition game, loss aversion could serve as a costly and hence credible signal that the contestant is not about to concede, preempting his opponent’s strategy of outlasting him just one more round.

The example also shows that it is costly to be risk averse for gains and risk seeking for losses. These attitudes make you willing to pay a premium to obtain a sure gain rather than face a gamble, and also willing to pay a premium (in expected value) to avoid a sure loss.

On account of disastrous losses in Wall Street that morning, I had determined to kill myself. I’m not of much account, any way, and I was desperate. I knew Uncle Robert would give me no money to repay my stock losses, for he always thought speculation no better than any other sort of gambling—and it isn’t.

[My mother] related a childhood anecdote about one of her sisters who had an appendix operation and afterwards had been given a beautiful purse by another sister. My mother was fourteen at the time. Oh, how she yearned to have an exquisitely beaded purse like her sister's, but she dared not open her mouth. So guess what? She feigned a pain in her side and went the whole way with her story. Her family took her to several doctors. They were unable to produce a diagnosis and so opted for exploratory surgery. It had been a bold gamble on my mother's part, but it worked--she was given an identical little purse! When she received the coveted purse, my mother was elated despite being in physical agony from the surgery. Two nurses came in and one stuck a thermometer in her mouth. My mother said, 'Ummm, ummm,' to show the purse to the second nurse, who answered, 'Oh, for me? Why, thank you!' and took the purse! My mother was at a loss, and never figured out how to say, 'I didn't mean to give it to you. Please return it to me.' Her story poignantly reveals how painful it can be when people don't openly acknowledge their needs.

The word addict scares adults, because it’s all about loss of control—our fears that we’d drink or gamble or screw against logic, throw money we don’t have into greedily programmed machines or wake up late mornings with a monstrous hangover and an even more monstrous bedroom companion. Kids don’t fear addiction (they don’t have much control over anything to begin with). Better for them to visualize some tangible bogeyman, like the monster under the bed or evil trolls who live beneath storybook bridges. 

Kids shouting and skidding in the playground with no idea what future Hells awaited them: boring jobs and ruinous mortgages and bad marriages and hair loss and hip replacements and lonely cups of coffee in an empty house and a colostomy bag at the hospital. Most people seemed satisfied with the thin decorative glaze and the artful stage lighting that, sometimes, made the bedrock atrocity of the human predicament look somewhat more mysterious or less abhorrent. People gambled and golfed and planted gardens and traded stocks and had sex and bought new cars and practiced yoga and worked and prayed and redecorated their homes and got worked up over the news and fussed over their children and gossiped about their neighbors and pored over restaurant reviews and founded charitable organizations and supported political candidates and attended the U.S. Open and dined and travelled and distracted themselves with all kinds of gadgets and devices, flooding themselves incessantly with information and texts and communication and entertainment from every direction to try to make themselves forget it: where we were, what we were. But in a strong light there was no good spin you could put on it. It was rotten top to bottom. Putting your time in at the office; dutifully spawning your two point five; smiling politely at your retirement party; then chewing on your bedsheet and choking on your canned peaches at the nursing home. It was better never to have been born—never to have wanted anything, never to have hoped for anything.

Is there a bird among them, dear boy?” Charity asked innocently, peering not at the things on the desk, but at his face, noting the muscle beginning to twitch at Ian’s tense jaw. “No.” “Then they must be in the schoolroom! Of course,” she said cheerfully, “that’s it. How like me, Hortense would say, to have made such a silly mistake.” Ian dragged his eyes from the proof that his grandfather had been keeping track of him almost from the day of his birth-certainly from the day when he was able to leave the cottage on his own two legs-to her face and said mockingly, “Hortense isn’t very perceptive. I would say you are as wily as a fox.” She gave him a little knowing smile and pressed her finger to her lips. “Don’t tell her, will you? She does so enjoy thinking she is the clever one.” “How did he manage to have these drawn?” Ian asked, stopping her as she turned away. “A woman in the village near your home drew many of them. Later he hired an artist when he knew you were going to be somewhere at a specific time. I’ll just leave you here where it’s nice and quiet.” She was leaving him, Ian knew, to look through the items on the desk. For a long moment he hesitated, and then he slowly sat down in the chair, looking over the confidential reports on himself. They were all written by one Mr. Edgard Norwich, and as Ian began scanning the thick stack of pages, his anger at his grandfather for this outrageous invasion of his privacy slowly became amusement. For one thing, nearly every letter from the investigator began with phrases that made it clear the duke had chastised him for not reporting in enough detail. The top letter began, I apologize, Your Grace, for my unintentional laxness in failing to mention that indeed Mr. Thornton enjoys an occasional cheroot… The next one opened with, I did not realize, Your Grace, that you would wish to know how fast his horse ran in the race-in addition to knowing that he won. From the creases and holds in the hundreds of reports it was obvious to Ian that they’d been handled and read repeatedly, and it was equally obvious from some of the investigator’s casual comments that his grandfather had apparently expressed his personal pride to him: You will be pleased to know, Your Grace, that young Ian is a fine whip, just as you expected… I quite agree with you, as do many others, that Mr. Thornton is undoubtedly a genius… I assure you, Your Grace, that your concern over that duel is unfounded. It was a flesh wound in the arm, nothing more. Ian flipped through them at random, unaware that the barricade he’d erected against his grandfather was beginning to crack very slightly. “Your Grace,” the investigator had written in a rare fit of exasperation when Ian was eleven, “the suggestion that I should be able to find a physician who might secretly look at young Ian’s sore throat is beyond all bounds of reason. Even if I could find one who was willing to pretend to be a lost traveler, I really cannot see how he could contrive to have a peek at the boy’s throat without causing suspicion!” The minutes became an hour, and Ian’s disbelief increased as he scanned the entire history of his life, from his achievements to his peccadilloes. His gambling gains and losses appeared regularly; each ship he added to his fleet had been described, and sketches forwarded separately; his financial progress had been reported in minute and glowing detail.

millions—often more than the budget of the movie itself—studios regularly write off major releases as complete washes. And when they do succeed, no one has any idea why or which of the ingredients were responsible for it. As screenwriter William Goldman famously put it, nobody knows anything—even the people in charge. It’s all a big gamble. Which is fine, because their system is designed to absorb these losses. The hits pay for the mistakes many times over. But there is a big difference between them and everyone else in the world. You can’t really afford for your start-up to fail; your friend has sunk everything into her new business; and I can’t allow my book to flop. We don’t have ten other projects coming down the pike. This is it.

Besides, if you wouldn’t duel with Lord Everly when he called you a cheat, you certainly wouldn’t harm poor Lord Howard merely for touching my arm.” “Wouldn’t I?” he asked softly. “Those are two very different issues.” Not for the first time, Elizabeth found herself at a loss to understand him. Suddenly his presence was vaguely threatening again; whenever he stopped playing the amusing gallant he became a dark, mysterious stranger. Raking her hair off her forehead, she glanced out the window. “It must be after three already. I really must leave.” She surged to her feet, smoothing her skirts. “Thank you for a lovely afternoon. I don’t know why I remained. I shouldn’t have, but I am glad I did…” She ran out of words and watched in wary alarm as he stood up. “Don’t you?” he asked softly. “Don’t I what?” “Know why you’re still here with me?” “I don’t even know who you are?” she cried. “I know about places you’ve been, but not your family, your people. I know you gamble great sums of money at cards, and I disapprove of that-“ “I also gamble great sums of money on ships and cargo-will that improve my character in your eyes?” “And I know,” she continued desperately, watching his gaze turn warm and sensual, “I absolutely know you make me excessively uneasy when you look at me the way you’re doing now!” “Elizabeth,” he said in a tone of tender finality, “you’re here because we’re already half in love with each other.” “Whaaat? she gasped. “And as to needing to know who I am, that’s very simple to answer.” His hand lifted, grazing her pale cheek, then smoothing backward, cupping her head. Gently he explained, “I am the man you’re going to marry.” “Oh, my God!” “I think it’s too late to start praying,” he teased huskily. “You-you must be mad,” she said, her voice quavering. “My thoughts exactly,” he whispered, and, bending his head, he pressed his lips to her forehead, drawing her against his chest, holding her as if he knew she would struggle if he tried to do more than that. “You were not in my plans, Miss Cameron.” “Oh, please,” Elizabeth implored helplessly, “don’t do this to me. I don’t understand any of this. I don’t know what you want.” “I want you.” He took her chin between his thumb and forefinger and lifted it, forcing her to meet his steady gaze as he quietly added, “And you want me.” Elizabeth’s entire body started to tremble as his lips began descending to hers, and she sought to forestall what her heart knew was inevitable by reasoning with him. “A gently bred Englishwomen,” she shakily quoted Lucinda’s lecture, “feels nothing stronger than affection. We do not fall in love.” His warm lips covered hers. “I’m a Scot,” he murmured huskily. “We do.” “A Scot!” she uttered when he lifted his mouth from hers. He laughed at her appalled expression. “I said ‘Scot,’ not ‘ax murderer.” A Scot who was a gambler to boot! Havenhurst would land on the auction block, the servants turned off, and the world would fall apart. “I cannot, cannot marry you.” “Yes, Elizabeth,” he whispered as his lips trailed a hot path over her cheek to her ear, “you can.

And the worst fault I have to find with the world is, that it is dull. Do you know, I am going to justify gambling in spite of you. It is a refuge from dullness." "I don't admit the justification," said Deronda. "I think what we call the dullness of things is a disease in ourselves. Else how can any one find an intense interest in life? And many do." "Ah, I see! The fault I find in the world is my own fault," said Gwendolen, smiling at him. Then after a moment, looking up at the ivory again, she said, "Do _you_ never find fault with the world or with others?" "Oh, yes. When I am in a grumbling mood." "And hate people? Confess you hate them when they stand in your way--when their gain is your loss? That is your own phrase, you know." "We are often standing in each other's way when we can't help it. I think it is stupid to hate people on that ground." "But if they injure you and could have helped it?" said Gwendolen with a hard intensity unaccountable in incidental talk like this. Deronda wondered at her choice of subjects. A painful impression arrested his answer a moment, but at last he said, with a graver, deeper intonation, "Why, then, after all, I prefer my place to theirs." "There I believe you are right," said Gwendolen.

Elizabeth, we’re going to have to stop.” Elizabeth’s swirling senses began to return to reality, slowly at first, and then with a sickening plummet. Passion gave way to fear and then to anguished shame as she realized she was lying in a man’s arms, her shirt unfastened, her flesh exposed to his gaze and touch. Closing her eyes, she fought back the sting of tears and shoved his hand away, lurching into an upright position. “Let me rise, please,” she whispered, her voice strangled with self-revulsion. Her skin flinched as he began to fasten her shirt, but in order to do it he had to release his hold on her, and the moment he did, she scrambled to her feet. Turning her back to him, she fastened her shirt with shaking hands and snatched her jacket from the peg beside the fire. He moved so silently that she had no idea he’d stood until his hands settled on her stiff shoulders. “Don’t be frightened of what is between us. I’ll be able to provide for you-“ All of Elizabeth’s confusion and anguish exploded in a burst of tempestuous, sobbing fury that was directed at herself, but which she hurtled at him. Tearing free of his grasp, she whirled around. “Provide for me,” she cried. “Provide what? A-a hovel in Scotland where I’ll stay while you dress the part of an English gentleman so you can gamble away everything-“ “If things go on as I expect,” he interrupted her in a voice of taut calm, “I’ll be one of the richest men in England within a year-two at the most. If they don’t, you’ll still be well provided for.” Elizabeth snatched her bonnet and backed away from him in a fear that was partly of him and partly of her own weakness. “This is madness. Utter madness.” Turning, she headed for the door. “I know,” he said gently. She reached for the door handle and jerked the door open. Behind her, his voice stopped her in midstep. “If you change your mind after we leave in the morning, you can reach me at Hammund’s town house in Upper Brook Street until Wednesday. After that I’d intended to leave for India. I’ll be gone until winter.” “I-I hope you have a safe voyage,” she said, too overwrought to wonder about the sharp tug of loss she felt at the realization he was leaving. “If you change your mind in time,” he teased, “I’ll take you with me.” Elizabeth fled in sheer terror from the gentle confidence she’d heard in his smiling voice. As she galloped through the thick fog and wet underbrush she was no longer the sensible, confident young lady she’d been before; instead she was a terrified, bewildered girl with a mountain of responsibilities and an upbringing that convinced her the wild attraction she felt for Ian Thornton was sordid and unforgivable.

i will tell you about selfish people even when they know they will hurt you they walk into your life to taste you because you are the type of being they don’t want to miss out on you are too much shine to not be felt so when they have gotten a good look at everything you have to offer. when they have taken your skin, your hair, your secrets with them when they realize how real this is how much of a storm you are and it hits them. that is when the cowardice sets in. that is when the person you thought they were is replaced with the sad reality of what they are. that is when they lose every fighting bone in their body and leave after saying you will find better than me. you will stand there naked with half of them still hidden somewhere inside you and sob. asking them why they did it. why they forced you to love them when they had no intention of loving you back and they’ll say something along the lines of I just had to try. I had to give it a chance. It was you after all but that isn’t romantic. It isn’t sweet. The idea that they were so engulfed by your existence that had to risk breaking it for the sake of knowing they weren’t the one missing out your existence meant that little next to their curiosity of you this is the thing about selfish people they gamble entire beings. entire souls to please their own. One second they are holding you like the world in their lap and the next they have belittled you to a mere picture a moment. something of the past. one second. as if the human heart means that little to them. isn’t it sad and funny how people have more guts these days to undress you with their fingers than they do to pick up the phone and call. apologize. for the loss.

When trying to understand why people acted in a certain way, you might use a short checklist to guide your probing: their knowledge, beliefs and experience, motivation and competing priorities, and their constraints. •​Knowledge. Did the person know something, some fact, that others didn’t? Or was the person missing some knowledge you would take for granted? Devorah was puzzled by the elderly gentleman’s resistance until she discovered that he didn’t know how many books could be stored on an e-book reader. Mitchell knew that his client wasn’t attuned to narcissistic personality disorders and was therefore at a loss to explain her cousin’s actions. Walter Reed’s colleagues relied on the information that mosquitoes needed a two- to three-week incubation period before they could infect people with yellow fever. •​Beliefs and experience. Can you explain the behavior in terms of the person’s beliefs or perceptual skills or the patterns the person used, or judgments of typicality? These are kinds of tacit knowledge—knowledge that hasn’t been reduced to instructions or facts. Mike Riley relied on the patterns he’d seen and his sense of the typical first appearance of a radar blip, so he noticed the anomalous blip that first appeared far off the coastline. Harry Markopolos looked at the trends of Bernie Madoff’s trades and knew they were highly atypical. •​Motivation and competing priorities. Cheryl Cain used our greed for chocolate kisses to get us to fill in our time cards. Dennis wanted the page job more than he needed to prove he was right. My Procter & Gamble sponsors weren’t aware of the way the homemakers juggled the needs for saving money with their concern for keeping their clothes clean and their families happy. •​Constraints. Daniel Boone knew how to ambush the kidnappers because he knew where they would have to cross the river. He knew the constraints they were operating under. Ginger expected the compliance officer to release her from the noncompete clause she’d signed because his company would never release a client list to an outsider.

Anthony’s current wealth is 1 million. Betty’s current wealth is 4 million. They are both offered a choice between a gamble and a sure thing. The gamble: equal chances to end up owning 1 million or 4 million OR The sure thing: own 2 million for sure In Bernoulli’s account, Anthony and Betty face the same choice: their expected wealth will be 2.5 million if they take the gamble and 2 million if they prefer the sure-thing option. Bernoulli would therefore expect Anthony and Betty to make the same choice, but this prediction is incorrect. Here again, the theory fails because it does not allow for the different reference points from which Anthony and Betty consider their options. If you imagine yourself in Anthony’s and Betty’s shoes, you will quickly see that current wealth matters a great deal. Here is how they may think: Anthony (who currently owns 1 million): “If I choose the sure thing, my wealth will double with certainty. This is very attractive. Alternatively, I can take a gamble with equal chances to quadruple my wealth or to gain nothing.” Betty (who currently owns 4 million): “If I choose the sure thing, I lose half of my wealth with certainty, which is awful. Alternatively, I can take a gamble with equal chances to lose three-quarters of my wealth or to lose nothing.” You can sense that Anthony and Betty are likely to make different choices because the sure-thing option of owning 2 million makes Anthony happy and makes Betty miserable. Note also how the sure outcome differs from the worst outcome of the gamble: for Anthony, it is the difference between doubling his wealth and gaining nothing; for Betty, it is the difference between losing half her wealth and losing three-quarters of it. Betty is much more likely to take her chances, as others do when faced with very bad options. As I have told their story, neither Anthony nor Betty thinks in terms of states of wealth: Anthony thinks of gains and Betty thinks of losses. The psychological outcomes they assess are entirely different, although the possible states of wealth they face are the same.

WHY DIVERSIFY? During the bull market of the 1990s, one of the most common criticisms of diversification was that it lowers your potential for high returns. After all, if you could identify the next Microsoft, wouldn’t it make sense for you to put all your eggs into that one basket? Well, sure. As the humorist Will Rogers once said, “Don’t gamble. Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.” However, as Rogers knew, 20/20 foresight is not a gift granted to most investors. No matter how confident we feel, there’s no way to find out whether a stock will go up until after we buy it. Therefore, the stock you think is “the next Microsoft” may well turn out to be the next MicroStrategy instead. (That former market star went from $3,130 per share in March 2000 to $15.10 at year-end 2002, an apocalyptic loss of 99.5%).1 Keeping your money spread across many stocks and industries is the only reliable insurance against the risk of being wrong. But diversification doesn’t just minimize your odds of being wrong. It also maximizes your chances of being right. Over long periods of time, a handful of stocks turn into “superstocks” that go up 10,000% or more. Money Magazine identified the 30 best-performing stocks over the 30 years ending in 2002—and, even with 20/20 hindsight, the list is startlingly unpredictable. Rather than lots of technology or health-care stocks, it includes Southwest Airlines, Worthington Steel, Dollar General discount stores, and snuff-tobacco maker UST Inc.2 If you think you would have been willing to bet big on any of those stocks back in 1972, you are kidding yourself. Think of it this way: In the huge market haystack, only a few needles ever go on to generate truly gigantic gains. The more of the haystack you own, the higher the odds go that you will end up finding at least one of those needles. By owning the entire haystack (ideally through an index fund that tracks the total U.S. stock market) you can be sure to find every needle, thus capturing the returns of all the superstocks. Especially if you are a defensive investor, why look for the needles when you can own the whole haystack?

But depression wasn’t the word. This was a plunge encompassing sorrow and revulsion far beyond the personal: a sick, drenching nausea at all humanity and human endeavor from the dawn of time. The writhing loathsomeness of the biological order. Old age, sickness, death. No escape for anyone. Even the beautiful ones were like soft fruit about to spoil. And yet somehow people still kept fucking and breeding and popping out new fodder for the grave, producing more and more new beings to suffer like this was some kind of redemptive, or good, or even somehow morally admirable thing: dragging more innocent creatures into the lose-lose game. Squirming babies and plodding, complacent, hormone-drugged moms. Oh, isn’t he cute? Awww. Kids shouting and skidding in the playground with no idea what future Hells awaited them: boring jobs and ruinous mortgages and bad marriages and hair loss and hip replacements and lonely cups of coffee in an empty house and a colostomy bag at the hospital. Most people seemed satisfied with the thin decorative glaze and the artful stage lighting that, sometimes, made the bedrock atrocity of the human predicament look somewhat more mysterious or less abhorrent. People gambled and golfed and planted gardens and traded stocks and had sex and bought new cars and practiced yoga and worked and prayed and redecorated their homes and got worked up over the news and fussed over their children and gossiped about their neighbors and pored over restaurant reviews and founded charitable organizations and supported political candidates and attended the U.S. Open and dined and travelled and distracted themselves with all kinds of gadgets and devices, flooding themselves incessantly with information and texts and communication and entertainment from every direction to try to make themselves forget it: where we were, what we were. But in a strong light there was no good spin you could put on it. It was rotten top to bottom. Putting your time in at the office; dutifully spawning your two point five; smiling politely at your retirement party; then chewing on your bedsheet and choking on your canned peaches at the nursing home. It was better never to have been born—never to have wanted anything, never to have hoped for anything.

How exactly the debt should be funded was to be the most inflammatory political issue. During the Revolution, many affluent citizens had invested in bonds, and many war veterans had been paid with IOUs that then plummeted in price under the confederation. In many cases, these upright patriots, either needing cash or convinced they would never be repaid, had sold their securities to speculators for as little as fifteen cents on the dollar. Under the influence of his funding scheme, with government repayment guaranteed, Hamilton expected these bonds to soar from their depressed levels and regain their full face value. This pleasing prospect, however, presented a political quandary. If the bonds appreciated, should speculators pocket the windfall? Or should the money go to the original holders—many of them brave soldiers—who had sold their depressed government paper years earlier? The answer to this perplexing question, Hamilton knew, would define the future character of American capital markets. Doubtless taking a deep breath, he wrote that “after the most mature reflection” about whether to reward original holders and punish current speculators, he had decided against this approach as “ruinous to public credit.”25 The problem was partly that such “discrimination” in favor of former debt holders was unworkable. The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners—an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buyers simply predatory speculators. The original investors had gotten cash when they wanted it and had shown little faith in the country’s future. Speculators, meanwhile, had hazarded their money and should be rewarded for the risk. In this manner, Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions. The knowledge that government could not interfere retroactively with a financial transaction was so vital, Hamilton thought, as to outweigh any short-term expediency. To establish the concept of the “security of transfer,” Hamilton was willing, if necessary, to reward mercenary scoundrels and penalize patriotic citizens. With this huge gamble, Hamilton laid the foundations for America’s future financial preeminence.

But depression wasn’t the word. This was a plunge encompassing sorrow and revulsion far beyond the personal: a sick, drenching nausea at all humanity and human endeavor from the dawn of time. The writhing loathsomeness of the biological order. Old age, sickness, death. No escape for anyone. Even the beautiful ones were like soft fruit about to spoil. And yet somehow people still kept fucking and breeding and popping out new fodder for the grave, producing more and more new beings to suffer like this was some kind of redemptive, or good, or even somehow morally admirable thing: dragging more innocent creatures into the lose-lose game. Squirming babies and plodding, complacent, hormone-drugged moms. Oh, isn’t he cute? Awww. Kids shouting and skidding in the playground with no idea what future Hells awaited them: boring jobs and ruinous mortgages and bad marriages and hair loss and hip replacements and lonely cups of coffee in an empty house and a colostomy bag at the hospital. Most people seemed satisfied with the thin decorative glaze and the artful stage lighting that, sometimes, made the bedrock atrocity of the human predicament look somewhat more mysterious or less abhorrent. People gambled and golfed and planted gardens and traded stocks and had sex and bought new cars and practiced yoga and worked and prayed and redecorated their homes and got worked up over the news and fussed over their children and gossiped about their neighbors and pored over restaurant reviews and founded charitable organizations and supported political candidates and attended the U.S. Open and dined and travelled and distracted themselves with all kinds of gadgets and devices, flooding themselves incessantly with information and texts and communication and entertainment from every direction to try to make themselves forget it: where we were, what we were. But in a strong light there was no good spin you could put on it. It was rotten top to bottom. Putting your time in at the office; dutifully spawning your two point five; smiling politely at your retirement party; then chewing on your bedsheet and choking on your canned peaches at the nursing home. It was better never to have been born—never to have wanted anything, never to have hoped for anything. And all this mental thrashing and tossing was mixed up with recurring images, or half-dreams, of Popchik lying weak and thin on one side with his ribs going up and down—I’d forgotten him somewhere, left him alone and forgotten to feed him, he was dying—over and over, even when he was in the room with me, head-snaps where I started up guiltily, where is Popchik; and this in turn was mixed up with head-snapping flashes of the bundled pillowcase, locked away in its steel coffin.

Without such rejuvenating contact with our inner Self, we become depleted of Spirit and our lives reflect this emptiness. For example, I know individuals—and you may, as well—who seem to have it all (at least on a material level, living prosperous, comfortable lives) but are still deeply unhappy because they’re out of touch with their Spirit. Others feel this loss of contact with their Spirit but try to fill the void through drinking, drugging, gambling, having meaningless sex, and more. With

An especially strong form of depression was studied in Britain in the 1980s. Sufferers had purchased a lottery ticket a few weeks before the drawing, knowing full well that the odds against winning were enormous. They expressed no hope of winning and rationally declared that they were buying the ticket for fun. Yet once the drawing was held and they had lost, they slumped into debilitating depression. The symptoms were significantly different from "gambling depression," which is an effect of addiction to gambling. The victims of "lottery depression" had symptoms like those of people who have suffered severe losses, such as destruction of a house or loss of a parent. The interpretations given by therapists was that in the two weeks or so between the purchase of the ticket and the drawing for the winner, these victims had fantasized, consciously or unconsciously, wittingly or not, about what they would do upon winning the lottery. The actual drawing made them lose everything they had acquired in the fantasy world. In that world, they did indeed suffer a severe loss. The amazing thing is that the fantasy world seems to have had profound effects on the psychological reality of the real world, given that the patients had no delusions about the odds of winning, and said so clearly.

The party for those addicted to markets has been the “make it rain” free-money printing game run since 1971. They may call it “Quantitavive Easing”, (QE) or “monetary policy” or “Asset purchases by the Fed”, or any number of terms which cause 99% of humans to stop listening. I urge everyone to demand better from governments, professionals and public servants. To demand real “service” from those who claim to be in this role. Right now we are letting those addicted to money, play with “self” accountability, which is creating addicts and poverty at a faster rate than our western economies can create prosperity. “Asset purchases” means the Fed printing money, to give this money to banks in exchange for some of the banks bad assets that need to be purged. How wealthy would your family be if each losing investment could simply be taken off your hands…using borrowed money that the taxpayer must then repay? How poor would your neighbors be if they did not have this money pipeline working for them? The newly printed money for asset purchases, is backed by US Treasury IOU’s, or similar notes and borrowings, for which the public must now repay through income taxes…forever. Banks thus get billions in freshly created cash, while the US public gets the bad assets, or gets stuck with the bill to pay back the money created to purchase the bad assets. I could probably refine that description a bit, but for now I am going to let it lay here. Any corrections are welcomed with gratitude. Dousing the flames of the 2008 mortgage bubble disaster, using government money issued in this manner, was said to be needed to prevent complete financial system meltdown. A better choice would have been to let those with a gambling addiction, suffer the consequences of their addiction, like we demand of every addict in Downtown LA. But the Fed is the perfect tool for dumping bank gambling losses and bad assets upon the taxpayer, and to make taxpayers pay to give the banks a clean-money start each time. The only thing left to do for the recipients of some of those newly printed billions, is to “launder it”, to get

would once again haul the lion's share of military supplies; that Congress would grant their claim of $494,000 in losses suffered in 1857 on the way to Fort Bridger, when attacking Mormons destroyed several trains; and, finally, that Congress would quit its interminable bickering and authorize a triweekly service over the Central Route, thus saving the Pony Express. None of these expectations materialized. In the end, desperation led William Russell to traffic in stolen government bonds, money belonging to the Indian Trust Fund of the Interior Department, where they were held for the benefit of various Indian tribes. Russell "borrowed" the bonds to cover the company's losses. When he learned what had happened, President Lincoln himself insisted on an investigation. Russell was arrested in his New York office and jailed. Called before a congressional committee, he testified freely and frankly, at the suggestion of his lawyer, who knew that by a congressional act of 1857, witnesses who testified before Congress could not be indicted for the matters on which they testified. Although he was saved by a legal technicality from trial and imprisonment, Russell did not escape censure. In a letter to the attorney general a week after his inauguration, Lincoln referred to the matter of the stolen bonds as "the Russell fraud." Though spared the worst punishment, Russell was nevertheless disgraced, and returned to Missouri, where he died broke on September 10, 1872. He was sixty years old. The Pony Express had been Russell's great gamble, the critical turn of the cards, and it had failed. "That the business men and citizens of Lexington believed in Russell and highly respected him is quite obvious," wrote the authors of Saddles and Spurs. "His record for more than two decades was without spot or blemish. During that time he was regarded as one of the town's most progressive citizens. Then, in the year 1860, in the far away city of Washington he, by one act, stained that shining record. Anyone who studies his remarkable life, including this incident, turns from it all with a feeling of intense sadness that a brilliant career such as his should close under a shadow." William Waddell returned to Lexington and died there on April 1, 1862, at the age of sixty-five. As for Alexander Majors, he moved to Salt Lake City, where he tried freighting, then prospecting. After 1879, he lived in Kansas City and Denver. Buffalo Bill Cody, then at the height of

Betting and gambling are suitable for discrete events but not for continuous processes. If you introduce the behavioral characteristics of betting or gambling into a continuous process, you are leaving yourself open to enormous losses.

Wall Street trading desks at the end of each year offer a flavor of the problem. If a Wall Street trader expects to be paid a bonus of one million dollars and he’s given only half a million, he feels himself to be, and behaves as if he is, in the domain of losses. His reference point is an expectation of what he would receive. That expectation isn’t a stable number; it can be changed in all sorts of ways. A trader who expects to be given a million-dollar bonus, and who further expects everyone else on his trading desk to be given million-dollar bonuses, will not maintain the same reference point if he learns that everyone else just received two million dollars. If he is then paid a million dollars, he is back in the domain of losses. Danny would later use the same point to explain the behavior of apes in experiments researchers had conducted on bonobos. “If both my neighbor in the next cage and I get a cucumber for doing a great job, that’s great. But if he gets a banana and I get a cucumber, I will throw the cucumber at the experimenter’s face.” The moment one ape got a banana, it became the ape next door’s reference point. The reference point was a state of mind. Even in straight gambles you could shift a person’s reference point and make a loss seem like a gain, and vice versa. In so doing, you could manipulate the choices people made, simply by the way they were described. They gave the economists a demonstration of the point:

I engage in a gambling strategy that has 999 chances in 1,000 of making $ 1 (event A) and 1 chance in 1,000 of losing $ 10,000 (event B), as in Table 6.1. My expectation is a loss of close to $ 9 (obtained by multiplying the probabilities by the corresponding outcomes).

Gambling has been fed by knowledge that, if disaster struck, someone else—borrowers, investors, taxpayers—would end up bearing at least some of the losses,” wrote the Economist. At every stop on the securitization gravy train, investment banks generated big fees for themselves. They had no incentive to tap the brakes.

For the second time, the Ten-Count System had shown moderately heavy losses mixed with “lucky” streaks of the most dazzling brilliance. I learned later that this was a characteristic of a random series of favorable bets. And I would see it again and again in real life in both the gambling and the investment worlds.

Poker players explained to me that there’s a particular moment at which players are extremely vulnerable to an emotional surge. It’s not when they’ve won a huge pot or when they’ve drawn a fantastic hand. It’s when they’ve just lost a lot of money through bad luck (a ‘bad beat’) or bad strategy. The loss can nudge a player into going ‘on tilt’ – making overly aggressive bets in an effort to win back what he wrongly feels is still his money. The brain refuses to register that the money has gone. Acknowledging the loss and recalculating one’s strategy would be the right thing to do, but that is too painful. Instead, the player makes crazy bets to rectify what he unconsciously believes is a temporary situation. It isn’t the initial loss that does for him, but the stupid plays he makes in an effort to deny that the loss has happened. The eat economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk: ‘a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise’. Even those of us who aren’t professional poker players know how it feels to chase a loss.

In 2009, an American soldier named Bowe Bergdahl slipped through a gap in the concertina wire at his combat outpost in southern Afghanistan and walked off into the night. He was quickly captured by a Taliban patrol, and his absence triggered a massive search by the US military that put thousands of his fellow soldiers at risk. The level of betrayal felt by soldiers was so extreme that many called for Bergdahl to be tried for treason when he was repatriated five years later. Technically his crime was not treason, so the US military charged him with desertion of his post—a violation that still carries a maximum penalty of death. The collective outrage at Sergeant Bergdahl was based on very limited knowledge but provides a perfect example of the kind of tribal ethos that every group—or country—deploys in order to remain unified and committed to itself. If anything, though, the outrage in the United States may not be broad enough. Bergdahl put a huge number of people at risk and may have caused the deaths of up to six soldiers. But in purely objective terms, he caused his country far less harm than the financial collapse of 2008, when bankers gambled trillions of dollars of taxpayer money on blatantly fraudulent mortgages. These crimes were committed while hundreds of thousands of Americans were fighting and dying in wars overseas. Almost 9 million people lost their jobs during the financial crisis, 5 million families lost their homes, and the unemployment rate doubled to around 10 percent. For nearly a century, the national suicide rate has almost exactly mirrored the unemployment rate, and after the financial collapse, America’s suicide rate increased by nearly 5 percent. In an article published in 2012 in The Lancet, epidemiologists who study suicide estimated that the recession cost almost 5,000 additional American lives during the first two years—disproportionately among middle-aged white men. That is close to the nation’s losses in the Iraq and Afghan wars combined. If Sergeant Bergdahl betrayed his country—and that’s not a hard case to make—surely the bankers and traders who caused the financial collapse did as well. And yet they didn’t provoke nearly the kind of outcry that Bergdahl did. Not a single high-level CEO has even been charged in connection with the financial collapse, much less been convicted and sent to prison, and most of them went on to receive huge year-end bonuses. Joseph Cassano of AIG Financial Products—known as “Mr. Credit-Default Swap”—led a unit that required a $99 billion bailout while simultaneously distributing $1.5 billion in year-end bonuses to his employees—including $34 million to himself. Robert Rubin of Citibank received a $10 million bonus in 2008 while serving on the board of directors of a company that required $63 billion in federal funds to keep from failing. Lower down the pay scale, more than 5,000 Wall Street traders received bonuses of $1 million or more despite working for nine of the financial firms that received the most bailout money from the US goverment.

It was hard, the authors said, to put a cost on the damage that gambling causes, but politicians needed to recognise that there was a trade-off. If you allowed gambling in order to raise revenue, you were causing damage to people’s lives by doing so and ultimately undermining society. Unlike insurance or other productive financial services, this is a zero sum industry: bookies’ profits are simply gamblers’ losses, and there is no broader societal benefit.

In betting and gambling games if you stop acting and do nothing, the losses will stop. But when investing, trading, or speculating, if you’re losing and stop acting, the losses don’t stop; they can continue to grow almost indefinitely.

The Great German general Erwin Rommel once made a distinction between a gamble and a risk. Both cases involve an action with only a chance of success, a chance that is heightened by acting with boldness. The difference is that with a risk, if you lose, you can recover: your reputation will suffer no long-term damage, your resources will not be depleted, and you can return to your original position with acceptable losses. With a gamble, on the other hand, defeat can lead to a slew of problems that are likely to spiral out of control. With a gamble there tend to be too many variables to complicate the picture down the road if things go on. The problem goes further: if you encounter difficulties in a gamble, it becomes harder to pull out—you realize that the stakes are too high; you cannot afford to lose. So you try harder to rescue the situation, often making it worse and sinking deeper in to the hole that you cannot get out of. People are drawn into gambles by their emotions: they see only glittering prospects if they win and ignore the ominous consequences if the lose. Taking risks is essential; gambling is foolhardy. It can be years before you recover from a gamble, if you recover at all.

According to Ivar, he and Dr Glowacki reached a final agreement on July 2, 1925, just days before the new participating preferred shares were to be sold. Ivar’s assistant, Karin Bökman, said she witnessed the signatures to the secret deal; she certified the translation of the original contract, as did a Polish notary. Dr Glowacki signed on behalf of the “Treasury of the Polish State,” and Ivar signed on behalf of International Match Corporation.32 Ivar apparently didn’t need to use the stamp he had prepared with a facsimile of Dr Glowacki’s signature. Like the B Shares, this contract was a marvel of financial innovation. First, the agreement provided for the creation of a new Dutch company called N.V. Maatschappij Garanta, or Garanta for short. Garanta would be incorporated in Amsterdam, and its shares would be owned by Polish citizens nominated by Dr Glowacki. Garanta would take over the entire match industry in Poland, from production to sale. Garanta also would assume “certain exchange losses which have been sustained by International Match Corporation in connection with financial transactions in Poland. This item is to be carried as an asset on the books of Garanta.”33 Apparently, Ivar had continued gambling on foreign exchange rates during 1925. This time, though, he had used International Match’s money, and this time he had lost. The secret agreement shifted those losses from International Match to Garanta. Durant and Berning were unaware of these losses, or their transfer.

he couldn’t see the wisdom of it from the point of view of anyone who wanted to live. He self-corrected his thoughts – anyone who was desperate to live. He wanted to live, of course he did, but at this precise moment he was happy enough to gamble his life for a bit of certainty. He had a lot to lose, but it was all in the future, not the present, and that potential loss wasn’t tangible enough to trouble him; he’d already lost too much that was real.

...Those who led us to indebtedness gambled as if in a casino. As long as they had gains, there was no debate. But now that they suffer losses, they demand repayment. And we talk about crisis. No, Mister President, they played, they lost, that’s the rule of the game, and life goes on. We cannot repay because we don’t have any means to do so. We cannot pay because we are not responsible for this debt. We cannot repay but the others owe us what the greatest wealth could never repay, that is blood debt. Our blood had flowed. We hear about the Marshall Plan that rebuilt Europe’s economy. But we never hear about the African plan which allowed Europe to face Hitlerian hordes when their economies and their stability were at stake. Who saved Europe? Africa. It is rarely mentioned, to such a point that we cannot be the accomplices of that thankless silence. If others cannot sing our praises, at least we must say that our fathers had been courageous and that our troops had saved Europe and set the world free from Nazism.

In people’s perceptions of money, as surely as in their perception of light and sound and the weather and everything else under the sun, what mattered was not the absolute levels but changes. People making choices, especially choices between gambles for small sums of money, made them in terms of gains and losses; they weren’t thinking about absolute levels. “I came back to Amos with that question, expecting that he would explain it to me,” Danny recalled. “Instead Amos says, ‘You’re right.

Actually, they soon discovered, you had to reduce the amount of the certain loss even further if you wanted to get people to accept it. When choosing between sure things and gambles, people’s desire to avoid loss exceeded their desire to secure gain.

Given that the monkeys aren’t very smart in the first place, you might assume that any gambling strategy was well beyond their capabilities. In that case, you’d expect them to prefer it when a researcher initially offered them two grapes instead of one. But precisely the opposite happened! Once the monkeys figured out that the two-grape researcher sometimes withheld the second grape and that the one-grape researcher sometimes added a bonus grape, the monkeys strongly preferred the one-grape researcher. A rational monkey wouldn’t have cared, but these irrational monkeys suffered from what psychologists call “loss aversion.” They behaved as if the pain from losing a grape was greater than the pleasure from gaining one. Up to now, the monkeys appeared to be as rational as humans in their use of money. But surely this last experiment showed the vast gulf that lay between monkey and man.

In 2010, a cognitive neuroscientist named Reza Habib asked twenty-two people to lie inside an MRI and watch a slot machine spin around and around. Half of the participants were “pathological gamblers”—people who had lied to their families about their gambling, missed work to gamble, or had bounced checks at a casino— while the other half were people who gambled socially but didn’t exhibit any problematic behaviors. Everyone was placed on their backs inside a narrow tube and told to watch wheels of lucky 7s, apples, and gold bars spin across a video screen. The slot machine was programmed to deliver three outcomes: a win, a loss, and a “near miss,” in which the slots almost matched up but, at the last moment, failed to align. None of the participants won or lost any money. All they had to do was watch the screen as the MRI recorded their neurological activity. “We were particularly interested in looking at the brain systems involved in habits and addictions,” Habib told me. “What we found was that, neurologically speaking, pathological gamblers got more excited about winning. When the symbols lined up, even though they didn’t actually win any money, the areas in their brains related to emotion and reward were much more active than in non-pathological gamblers. “But what was really interesting were the near misses. To pathological gamblers, near misses looked like wins. Their brains reacted almost the same way. But to a nonpathological gambler, a near miss was like a loss. People without a gambling problem were better at recognizing that a near miss means you still lose.” Two groups saw the exact same event, but from a neurological perspective, they viewed it differently. People with gambling problems got a mental high from the near misses—which, Habib hypothesizes, is probably why they gamble for so much longer than everyone else: because the near miss triggers those habits that prompt them to put down another bet. The nonproblem gamblers, when they saw a near miss, got a dose of apprehension that triggered a different habit, the one that says I should quit before it gets worse.

Loss of life was an accepted gamble that men took when they went to war. But no animal went to war: caught up in man's lethal affairs, they were an irreconcilable aberration.

The difference between gambling and taking a chance on something is that gambling is for its own sake, the sake of the high. Taking a chance means the risk is for something more. It means that the reward if you succeed has meaning beyond the moment of adrenaline, the ups and downs of the win and loss. Gambling is exciting, but taking a chance on something is… Well, it’s frightening, isn’t it?

Based upon my detailed betting records and additional records provided by the sources, here is a snapshot of Phil’s gambling habit between 2010 and 2014: He bet $110,000 to win $100,000 a total of 1,115 times. On 858 occasions, he bet $220,000 to win $200,000. (The sum of those 1,973 gross wagers came to more than $311 million.) In 2011 alone, he made 3,154 bets—an average of nearly nine per day. On one day in 2011 (June 22), he made forty-three bets on major-league baseball games, resulting in $143,500 in losses. He made a staggering 7,065 wagers on football, basketball, and baseball. Phil didn’t let his playing in PGA tournaments get in the way of betting. Indeed, according to the 2010–2014 betting records, he made 1,734 wagers on games during twenty-nine events. This included seventy separate bets on baseball and preseason pro football during The Barclays tournament in August 2011 where he shot 8-under and tied for 43rd (he won $415,000 in bets that weekend).

Based upon my detailed betting records and additional records provided by the sources, here is a snapshot of Phil’s gambling habit between 2010 and 2014: He bet $110,000 to win $100,000 a total of 1,115 times. On 858 occasions, he bet $220,000 to win $200,000. (The sum of those 1,973 gross wagers came to more than $311 million.) In 2011 alone, he made 3,154 bets—an average of nearly nine per day. On one day in 2011 (June 22), he made forty-three bets on major-league baseball games, resulting in $143,500 in losses. He made a staggering 7,065 wagers on football, basketball, and baseball. Phil didn’t let his playing in PGA tournaments get in the way of betting. Indeed, according to the 2010–2014 betting records, he made 1,734 wagers on games during twenty-nine events. This included seventy separate bets on baseball and preseason pro football during The Barclays tournament in August 2011 where he shot 8-under and tied for 43rd (he won $415,000 in bets that weekend). On February 11, 2012, a busy college basketball Saturday, Phil blew himself up by running his betting losses to nearly $4 million, according to the gambling sources familiar with Phil’s other bets. Even so, he displayed an incredible ability to compartmentalize. He shot 64 the following day to win the AT&T Pro-Am at Pebble Beach while playing with, and demolishing, Tiger Woods, by eleven strokes.

But what was really interesting were the near misses. To pathological gamblers, near misses looked like wins. Their brains reacted almost the same way. But to a nonpathological gambler, a near miss was like a loss. People without a gambling problem were better at recognizing that a near miss means you still lose.

Gradually reducing my teaching load from full-time, I finally resigned my UCI full professorship in 1982. I loved teaching and research and felt a sense of loss upon giving up a position I expected to enjoy for a lifetime, but it turned out to be for the best. I took what I liked with me. I kept my friends and continued my research collaborations. Free to do anything I wished, my childhood dream come true, I continued to present my work at meetings, as well as publish it in the mathematical, financial, and gambling literature.

Mary Carter Paint Company. Founded in 1958 as the successor to a 1908 company, it started as an acquirer of other paint companies, then evolved into a resort and casino developer in the Bahamas. Changing its name to Resorts International, it divested itself of the paint business and name. In 1972 the company had warrants that sold for 27 cents when the stock traded at $8 a share. The warrants were so cheap because they were worthless unless the stock traded above $40 a share. Fat chance. Since our model said the warrants were worth $4 a share, we bought all we could at the unbelievable bargain price of 27 cents each, which turned out to be 10,800 warrants at a total cost, after commissions, of $3,200. We hedged our risk of loss by shorting eight hundred shares of the common stock at $8. When the stock later fell to $1.50 a share, we bought back our short stock for a profit of about $5,000. Our gain now consisted of the warrants for “free” plus about $1,800 in cash. The warrants were trading close to zero but below the tiny amount the model said they were worth, so I decided we should put them away and forget them. Six busy years passed. Then in 1978 we started getting calls from people who wanted to buy our warrants. The company had purchased property in Atlantic City, New Jersey, after which it successfully lobbied, along with others, to bring casino gambling to the state, limited to Atlantic City. On May 26, 1978, Resorts opened the first US casino outside Nevada. Having received early approval, they had no competition and reaped windfall profits until other casinos opened late in 1979. With the stock now trading at $15 a share, ten times its earlier lowest price, and the warrants trading between $3 and $4, the model said they were worth about $7 or $8. So, instead of selling and reaping a $30,000 to $40,000 profit, I bought more warrants and sold stock short to hedge the risk of loss. As the stock broke through the $100 mark, we were still buying warrants and shorting stock. We finally sold the 27-cent warrants and others for above $100 each. We ultimately made more than $1 million.

Insuring against losses, however, goes against the grain of the risk principle. It asks people to accept a sure loss (the cost of the policy) rather than to gamble on an uncertain larger loss. Since we like to gamble on losses, this can be a difficult sell. Most insurance companies today avoid this problem by phrasing their messages in the positive. Insurance is now described not so much as a buffer against unpredictable loss but, instead, as a way of protecting the valuables you possess. Even if you don't currently have valuables to speak of, the companies encourage you to insure against losing the good things you're hoping will come your way in the future. Why gamble on losing your hopes? One company advertises: "Whether you want to secure your family's future or safeguard your auto or home, Prudential has the insurance products to help you achieve your goals." A television commercial for another tells us: "Is it possible to secure a dream? At The Hartford, we do just that." Allstate's motto (right below the "good hands" shtick) goes straight for the buzzwords without bothering over sentence structure: "Succeeding today, planning tomorrow." I doubt anybody has the faintest idea what that actually says, but, for a few cents a day, who wants to gamble with success and tomorrow?

This phenomenon has serious consequences for hierarchical organizations. Executives are just as loss-averse when the bets are small as they are when the gambles are large, even though small gambles do not raise the same issues of survival or ruin that provide a rationale for aversion to large risks. What’s more, small gambles offer opportunities for the risk-reducing effects of aggregation.

Fair point, but if you truly believe in Roko’s basilisk, you can’t ever be one hundred percent sure it won’t follow through on its pre-commitment to punish.” At last, I see what Max is getting at—a brutal version of Pascal’s wager, the famous eighteenth-century philosophical argument that humans gamble with their lives on whether or not God exists. Pascal posited that we should conduct our lives as if God were real and try to believe in God. If God doesn’t exist, we will suffer a finite loss—degrees of pleasure and autonomy. If God exists, our gains will be infinitely greater—eternal life in heaven instead of an eternity of suffering in hell.

The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners—an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buyers simply predatory speculators. The original investors had gotten cash when they wanted it and had shown little faith in the country’s future. Speculators, meanwhile, had hazarded their money and should be rewarded for the risk. In this manner, Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions. The knowledge that government could not interfere retroactively with a financial transaction was so vital, Hamilton thought, as to outweigh any short-term expediency. To establish the concept of the “security of transfer,” Hamilton was willing, if necessary, to reward mercenary scoundrels and penalize patriotic citizens. With this huge gamble, Hamilton laid the foundations for America’s future financial preeminence. As his report progressed, Hamilton tiptoed through a field seeded thickly with deadly political traps. The next incendiary issue was that some debt was owed by the thirteen states, some by the federal government. Hamilton decided to consolidate all the debt into a single form: federal

When choosing between sure things and gambles, people’s desire to avoid loss exceeded their desire to secure gain.

Behavioural economists have demonstrated experimentally that in order to get someone to take a gamble or to risk an investment, the potential pay-off must be about twice the potential loss. To get a person to toss a coin to win or lose $10 (students), or $10,000 (wealthy executives), the pay-off has to be greater than or equal to $20, or $20,000.

Flipping the gains to losses flips the types of behavior. When losses are likely, reckless gambles become acceptable (lower left cell).

I smoked one too many cigarettes- I heard one too many lies- Gambler on too many bets- And lost it all to this life.

The reference point was a state of mind. Even in straight gambles you could shift a person’s reference point and make a loss seem like a gain, and vice versa. In so doing, you could manipulate the choices people made, simply by the way they were described.

In people’s perceptions of money, as surely as in their perception of light and sound and the weather and everything else under the sun, what mattered was not the absolute levels but changes. People making choices, especially choices between gambles for small sums of money, made them in terms of gains and losses; they weren’t thinking about absolute levels.

Amos liked to call good ideas “raisins.” There were three raisins in the new theory. The first was the realization that people responded to changes rather than absolute levels. The second was the discovery that people approached risk very differently when it involved losses than when it involved gains. Exploring people’s responses to specific gambles, they found a third raisin: People did not respond to probability in a straightforward manner. Amos and Danny already knew, from their thinking about regret, that in gambles that offered a certain outcome, people would pay dearly for that certainty. Now they saw that people reacted differently to different degrees of uncertainty. When you gave them one bet with a 90 percent chance of working out and another with a 10 percent chance of working out, they did not behave as if the first was nine times as likely to work out as the second. They made some internal adjustment, and acted as if a 90 percent chance was actually slightly less than a 90 percent chance, and a 10 percent chance was slightly more than a 10 percent chance. They responded to probabilities not just with reason but with emotion.