How to build a championship team, with Daryl Morey of the 76ers

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Welcome back to Risky Business, our show about making better decisions.

I'm Maria Konnikova.

And I'm Nate Silver.

Today on the show, we're going to be talking about the topic that we always talk about, should Democrats panic about the polls in the election, which is now less than two weeks away.

And then we'll speak with Daryl Maury, who is the president of basketball operations for the Philadelphia 76ers and one of of the OG stat nerds that made it big in professional sports.

I think you'll really like this interview.

Yeah, I'm looking forward to that conversation.

But before we get to that, let's talk some politics.

So we're in week, what is it, week number two or three of

Should Democrats Panic?

I think the panic meter has gone up a little bit, actually.

Yeah,

I think so, too.

Obviously, it's still a toss-up, but it's not like we're seeing a surge or strong results or anything like that.

But look, there are toss-ups and there are toss-ups, Maria.

Would you rather have

pair of Jacks or Ace King offsuit?

It's close.

Yeah, it's close.

It's close.

I'd rather have a pair of Jacks.

It wins like 55% of the time, I think.

56.

No, I think I'd always go for the pair.

That's just me.

Yeah, I want the 56.

I mean, Trump Trump is,

we're taping this on Tuesday, early afternoon.

The latest silver bulletin forecast is Trump with a 53% chance of winning the Electoral College, Harris, 47%.

So that is very close.

But,

you know,

a couple weeks ago, we had the opposite situation where it was Harris with 53 or 55%.

You have seen some fairly consistent shifts in national polls where Harris led by as much as three or three and a half points.

It's down to about a point and a half or two points now.

In an election that's close,

a one, one and a half point swing makes a difference.

But again, the bare case for Harris is that like she had these various events that kind of temporarily inflated her numbers,

the nomination, the convention, and the debate.

And without that, the gravity kind of drags her down to having this very narrow national lead, which is maybe not enough in the Electoral College.

Michigan, Wisconsin, Pennsylvania are now basically tied.

Before they

had shown small Harris leads, you can put lead in scare quote if you want, but a point or two points.

Whereas Georgia, North Carolina, Nevada, Arizona,

Nevada, Nevada

are also very close, but except for Nevada,

probably leaning toward Trump by a point or two.

And so it just makes

Harris's path incrementally, incrementally a tiny bit more difficult than Trump's.

He gets a couple extra outs, basically.

Yeah, for sure.

I just voted, by the way.

I just voted in Nevada.

So

we've got my swing vote working for Clark County.

In Nevada, the early voting data

based on party registration, now we don't know what happens with unaffiliated voters.

We don't know how much votes being cannibalized from Election Day.

We don't even know that Republican registries are voting Republican.

There can be some Nikki Haley vote, I guess.

I don't know.

That's the very name of that.

But so far, through a few days of this, there's actually a slight GOP edge in early voting in Nevada.

That's one of the few states where

it has been more reliable in the past.

Look, I'm 98% of what you hear about early voting, I would chuck out.

But the vibes have gotten kind of bad for

Democrats.

The polls have gotten worse.

And I think on the one hand, this can be exaggerated if you cross a line from 52% to 48%.

It feels like a big deal.

On the other hand, I don't know.

There are a couple of posts up at the newsletter recently about,

you know, what is Harris's closing message in the final two weeks.

I'm like, what is it?

What do you think your closing message is?

You know, I just read your post about that.

Okay, so I biased.

I biased you.

Yeah, you did bias me because I just read it right before we started taping this.

So for people who have not read your newsletter, you drew a really interesting contrast between Harris and Obama,

which I actually thought was really thought-provoking because Obama's messaging was much more a call to action, like, this is what we stand for.

This is kind of, you know,

this is what I'm going to do, and this is what I need you to do right now.

And Harris's is just like, 14 days to go, let's go.

Okay.

Did you run out of things to say?

It's a fucking election.

So, so, you know, 14 days to go.

Yeah, okay, let's go.

And Democrats still have more

money in total.

Harris isn't raising record amounts.

Maybe it's close to record.

I'm not going to worry about inflation adjustments either way, but she's raising a shit ton of money.

I think that's a very good scientific term.

And they're usually a little bit more efficient with their ad buys.

They buy ads earlier.

And so

money is not particularly the problem.

No, but there are definitely, you know, there are messages that I think really matter and resonate with people, like abortion, you know, democracy, right?

Like there are key words that we can be using.

And we have, you know, election tampering from Elon Musk.

Like there are things like, you know, you have the, you have the Republicans calling out Democrats all the time.

And I know that, as you say, like, don't want to antagonize, but like two, 14 days, right?

If that's your message, then use those damn 14 days to like, you know, to do everything you can to get those swing states.

And man, I wonder, like inside that campaign, I was just looking at some New York Times and other headlines this morning being like, Shapiro's doing his best.

I'm like, inside the campaign, are there any people being like, fuck, we really should have gone with Shapiro?

Well, they were kind of doubling down on this likability vibes factor with walls, right?

And now you see.

By the way, when all this was happening in the summer, then it seems like things were evolving incredibly rapidly.

And it's hard to see

even for me.

You know, at some point I was like, oh, maybe these vibes are working.

I mean, if there's a theme of like my newsletter this year, it's that Democrats face a real uphill battle in this election and it's not fake polls or anything else.

Biden's age on top of everything else made it nearly impossible, whereas Harris is 50-50-ish or ACEK against Jack Jack.

But it's a difficult race to win when you're kind of like running

away from the incumbent, but can't really say that explicitly.

Maybe you just fucking throw Joe Biden under the bus, right?

I'm just

like, this motherfucker undermined me.

This motherfucker was way too old.

You fucked up the debates.

I'm good at debates unlike him, so I reduced the number of debates.

Yep.

Yep.

Gave me the fucking border to undermine me.

But yeah, I think that our panic meter, P-Panic, P-Panic, is

a

silver bulletin for it.

53% panic.

If I had to make a bullish case for Harris, right, um,

then I'd say the following: I'd say that, uh,

first of all, vibes don't really mean anything.

And if anything, they're kind of a contrarian indicator.

You saw that a little bit in 2022, where the bull showed a close race, and there was all this talk about like a a red wave.

Um,

you know, I'd say should probably have better turnout operation and have more money in the final two weeks here.

You know, I'd say,

I mean, it's hard to make the case she's a favorite.

You know what I mean?

It's easier to make the case that it's still a toss-up.

I mean, it's what the models say, basically, right?

But maybe I'd say, yeah, maybe I'd say, like,

maybe I'd say, yeah, you have some enthusiasm advantage in the polls for Republicans, and people are just kind of psyching themselves out a little bit.

But she's never really had like that much of a lead in the Electoral College in this point, in this whole campaign is the issue.

She's never really clearly pulled ahead.

I think that's absolutely true.

And if we go back to our poker, Jax versus Ace King, I think that's actually a pretty good metaphor.

Like she needs to hit her ace or her king.

And all Trump needs to do is avoid her outs, right?

Like he needs to avoid those cards.

And so it's that's that's why you'd rather have the 56%.

And now we're back with Daryl Maury, who, as we've said, is the president of basketball operations for the Philadelphia 76ers.

The NBA season is starting this week, so I'm looking forward to this chat.

Yeah, I'm really excited for this conversation.

Nate and I have both known Darren for a while.

Darren.

I said Daryl.

Let's see.

Let's go to

Replay Challenge.

Nate and I.

I thought you were doing really well, Maureen, and so we got to that point.

And then I fucked it all up.

All right.

Yes.

So, first question.

I want to make a deal here.

Daryl, if you give me your NBA championship pick, which teams are in the finals and who wins, I'll give you my election pick.

Okay.

Okay.

All right.

Well,

oh my God.

And I am the lucky person who gets to hear this for the first time before anyone else.

this is amazing no i think i think that's great i mean obviously the philadelphia 76ers

uh on the on the east side and uh i think i'll i'll jump in and just go with oklahoma city i mean i don't i don't feel like uh i that's sort of a boring pick but um

they they have so many assets they have so many assets even if they're they're close they're gonna put it over the top if they need to so

so my election pick is 52%, Trump 48%.

Oh, he cheated.

Okay.

I knew we, Daryl, we should have known that it was too good to be true.

He was never actually going to deliver on that.

He was always going to.

It was going to be momentous.

Exactly.

I was like, whoa, we finally get Nate to commit.

Nope.

I'm excited to be on because you guys are all about decision-making.

That's the only thing I do.

So

I'm on 20, 22 years, years,

I think that's right.

Yeah, of just making decisions for teams.

For people who don't know you, you're a true Riverian, to use a term from the book, Daryl.

Like you even play, I mean, you're really competitive and you like analytics, but you really want to win.

I mean, you like playing.

Yeah, exactly.

Exactly.

I think that's a motivation that we can all relate to.

It's funny, I was.

There's a new label I can add because of you, Nick.

Thank you.

Go ahead, Maria.

Sorry.

No, no.

I was giving a talk in Miami at

a conference where there were a lot of people who were very into analytics.

And we were talking about, you know, different strategies and all of this.

And I was like, you know what?

But like the bottom line is like, I love poker, but like, I want to fucking win, right?

Like, exactly.

And you guys

congrats, Marie, on the bracelet.

You're one up on Nate, as far as I know.

I'm zero, so it's not not hard to.

Thank you so much, Daryl.

Daryl, so I've played poker against you, I don't know, two or three times or something.

Yeah.

Daryl, I'm just going to tell people, has very bad chip etiquette.

You're supposed to stack your chips

in piles of 20.

Stacks of 20.

Absolutely.

If you don't do that, that's actually kind of a disadvantage to the players.

I can't see how many chips you have.

Oh, my gosh.

But you know, I'm one of those asses.

Daryl, I like you so much.

Don't know, Daryl.

No, I'm totally like you.

If a player is seen as good for the game, there might be less requests.

No, I

sadly, I haven't put the time into poker, and I get invited to a lot of games.

And I'm not sure why, maybe because I don't win very often.

So, yeah, I will say, though, Maria, you're a pro, so is Nate.

I try to at least let my ego, given the fact that I don't win poker a lot, I handle it by pointing out that I'm usually playing with two or three pros, and it doesn't seem very fair.

If you guys.

It's absolutely not fair and I promise I'll be nice to you if you let me play with you next time.

You definitely want me in your game area.

That's for sure.

You are very aggressive.

Do you use

game theory in any way in decision making?

Yeah.

So, I mean, probably the easiest one to talk through is like the two for one.

uh is a pretty easy sort of game theory problem.

No one's really gotten to the extreme game theory, but it's it's coming.

It's definitely coming.

So two for one, just for your audience, there's a 24-second shot clock in the NBA.

If you have the ball at, say, 40 seconds or 35 to 40 seconds, you can either run your normal offense and get a shot in 20 seconds, and now there's 15 remaining.

So you get one shot and they get one shot.

And

or you can take a shot quickly and then the other team only has 24 seconds, so you'll get the ball back.

Well, it turns out in thousands and thousands of trials at every level of basketball, this is going to shock your audience, which I'm sure is pretty sophisticated.

Two shots are better than one shot.

I know that will surprise people, but even

materially worse, two shots are better than one shot.

There are some exceptions in the fourth quarter and things like that, but in the first three quarters, it's pretty straightforward.

Well, obviously, if the other team says, okay, I'm going to shoot such that I force you into the two-for-one,

the other side isn't just this blah, you know, undynamic opponent.

They can then shoot even faster back at you.

In fact, the Utah Jazz when Jerry Sloan was there would do this more than any team that I can recall.

And then, so now

there's a whole set of other strategies that if they somehow manipulate the clock better than you, you can then regenerate the two-for-one, like fouling them or being super aggressive to speed up their offense.

There's a whole set of things.

So that's just one off the top.

Obviously, there's game theory

in-game in terms of like, how do you react to, you know, they put five-out shooting lineups on the floor.

How do you guard that?

Things like that.

So

And what about when you're making roster decisions, when you're thinking about trading, and when you actually have to think about yourself as one player in a multiplayer game, because there are other yous out there who are responsible for other teams who are going to be making different moves and responding to you?

So, how do you think about it off the court in that kind of metagame?

That's right.

And it's a heavily repeating game

because you know it's the same 30 teams.

What's really interesting is it's a heavily repeating game, but they can replace a key decision maker.

So, it's actually a repeating game at the ownership level more than it is at my level where people can get fired.

So, there have been sort of these famous examples of people, you know, making future promises or things like that that they then try to duck out of and things like that.

So yeah, we're in a repeating game that can work to your advantage if you treat it as such.

Again, your audience probably

pretty familiar with like what non-repeating or repeating game type differences.

So NBA teams place an extremely high premium on superstar talent, especially in the short term.

You know, the New York Knicks, what they give up for Bridges, like four or five first-round picks.

Um, and he's a good player, but probably the third best player on a contending team.

Um,

are GMs too short-term focused because of the incentive issue, or are like analytics nerds doing the math wrong and saying, actually, these draft picks are not that valuable, and superstars are very valuable?

Um, because if you run that through some model, it's like, okay, well, the draft picks worth like you know, 25 million dollars a year in excess returns and bridges is underpaid by $10 million.

And I don't know.

You know what I'm saying?

Yeah, I think teams are basically wrong at both extremes.

So they're both not aggressively long-term enough.

Like if you actually run the math and you just say that you're optimizing, you know, P, you guys talked about P doom on your last year, P championship over three years.

If you actually were just optimizing that variable, and I can promise you no team actually does do that

really like 20 something like 24 of the team should be fully rebuilding just long term every year

because if you don't have a top five player your odds of p championship are extremely low

so it's so I would say you know that's sort of the the the first thing the second thing I just just wanted to set up the for people to quite understand why these superstars are so important and why it's important to sort of save your assets for those moves.

I think the easiest way I describe it is take take Shohei Otani, you know, the best hitter in baseball now.

When Shohei Otani hits a home run against the Mets,

he then has to wait eight more times before he gets to hit again.

Basketball is like Shohei Otani.

He comes down the floor, hits a three, and then he comes on the floor again and he goes like, I'm still the best player, so I'm shooting again.

So just imagine Shohei Otani being able to hit every single time with Shohei Otani's on the base.

So that's what you can do in basketball.

It's actually gotten worse lately.

And this will be a little bit for the NBA nerds.

But because a lot of these players who are so great can only be guarded by switching a pick and roll, so pick and roll is one of the staples of our sport.

Basically, someone knocks your man off from guarding you.

It's pretty simple.

The easiest way to guard that, but one that hadn't been used because you can end up with seven feet people and six foot people, is you just switch the screen, and the person who gets hit stays with the guy that they were hit on, and the other person switches.

So, the smart NBA players, you know, see that now, and they

can basically screen and decide who guards them.

So, now imagine Shohei Otani not only bats every time he's up, he gets to select the pitcher on the other team he gets to go against every time down the floor.

So, and now you understand why, you know, someone like LeBron James can, at his peak, be worth

close to 30 wins on 82 games, like an insane impact that is not even closely replicated in any other sport.

So back to your original question, Nate, which now I feel like I've gone far afield.

It's a podcast, Daryl.

That's the entire purpose of the podcast.

Is that how it works?

Is that how it works?

It is.

It is.

Yeah, yeah.

Did I answer your original question?

I feel like I didn't.

Well, because you're famous for having this kind of, in fantasy baseball, you call the stars and scrubs approach.

Like, not to denigrate the back half of the current 76ers roster, but like

they're all on minimum salaries or just barely above minimum.

Is that partly because you think that you can actually get...

average talent instead of replacement level talent?

Yeah, so I think that becomes a linear, this is the, this is the geek podcast, so I can geek out a little bit.

it becomes a linear programming problem so the most efficient uh spending in the league are on minimums and draft picks who are playing above their above their weight essentially where you can they can be worth double or triple what you're paying them the problem is you can only put about eight players on the floor so you can't actually fully capture that efficiency like if i could put 60 uh draft picks or minimum players that i've carefully selected that are worth more than I'm paying them.

And I could do that.

I could win the game.

But unfortunately, you're only allowed to put five on the floor at a time and only really eight even play, usually, especially in a playoff series.

So

when you look at how do you generate the most wins, even a Even a player who is just worth his salary that's highly paid is actually more important than these players who are worth double or triple or what they're paid at the minimum.

Then, on top of that, because of the max salary, often the top player you have is not only paid the most, but also worth quite a bit more than what you're paying them because of the dynamics I said before.

Which is, so yes, I really, really love good players, and I can't get enough.

And people talk about it, but the reality is, like, USA basketball works.

I mean, you know, if you get lots of highly skilled basketball players together, it generally works really well.

How do you factor in kind of the uncertainty factor when you're in a game of individuals and champions, right?

When you're dealing with people who are superstars,

how does your thinking work?

Or do you just kind of not even think about it in terms of injury and that risk probability?

Where, right, if you actually like, if you invest everything in one superstar and like game one, shit happens, like, how do you think about that?

Because the superstar happens to be injury prone, hypothetically.

Hypothetically.

Yeah, it's very analogous to the starting pitcher issue that baseball teams have, but just multiply it by 10 again.

Again, if we were trying to just be the fifth best team, then it would become a much harder problem

because then the trade-offs of injured superstar come in.

But because you're trying to be the best of 30,

you have to buy risk all over the place.

And it's really just like, what risk are you buying?

Are you buying risks that they're not good enough?

Are you buying risks that they're bad people and they'll create off the court?

Are you buying risks that they're injured all the time?

Are you buying risks that their shot might fall apart?

Like, what risk are you buying?

Because if you're not buying risk, you're not going to win, right?

You have like beating the SP by 3 to 5% is not winning you the title.

So I tend to like buying injury risk because

when if it all hits together, you have a team that can win.

I'll I'll take that over a player who's 20% worse, but available all the time.

And I'm pretty sure the math

pans out on that.

You know, I tried that for my

fantasy basketball league last year.

I had Embiid, I had Porzinius, I had John Morant, right, Cade Cunningham, all these injury risks, and it totally fell flat in his face.

I was the worst team in the league so far.

I can't believe

you're arguing with the anecdote, Nate.

I can't, can't believe it.

Well, Nate,

you read Nate's book On the Edge,

and we talked about this on the podcast, but Nate bet over $1 million on sports for research in one year.

And Nate, can you remind me how much you ended up winning?

Bet $1.8 million

on the NBA.

And this is not something like a majority of the majority of the NCSA.

No, no, he bet 1.8.

And how much did you win?

5K.

So if you do the math, that roughly equates to your per hour?

Do you need to.

The hourly is like working at KFC

after taxes, not even before taxes.

Yeah.

Maria, how are your poker winnings since you're getting on Nate for

his sports wagering?

They're good.

They're good.

They're good per hour.

You're looking better than Nate.

Okay, that's good.

Yes, they're better than Nate.

I had a horrible summer at the World Series during the summer series and was down over 100K, which is not good.

And then went to EPT Barcelona where I had a score for almost 140,000, which put me in the black for the year.

And then went on to, you know, win the bracelet last week, have an eighth place finish in another bracelet event.

So, and have a few other deep runs.

So now I'm...

Now I'm doing more than 5K in the black.

To be fair, to be fair, um i don't think i've had 1.8 million dollars in poker buy-ins in my entire history of playing poker um over the last five and a half years however long i've been playing so i'm just actually running a long con on poker on nate so we're gonna do it like you're a hustler daryl we're doing like we've done like 10 events together that where he sees how aggressive i am and then i'll just tighten up when he when he's shoving on me one of these times

speaking of all in

you had a very aggressive strategy

this summer where you cleared out all your salary cap space and then you traded for

is it a sign-in trade or you just signed in outright?

Just signed out right, yeah, which is rare, super rare.

Signed out right, which is rare.

The superstar

or superstar adjacent player named Paul George, who's a great two-way player.

Superstar player.

Top, top, I mean, I don't know.

He's top in the league.

Come on.

He's a very good player, Paul George, who compliments your existing roster well

I mean

did you think you had a reasonable chance of I want to get you in a tampering situation what was plan B if Paul George hadn't become available yeah we didn't love plan B

well to be to be clear when we started off on that plan there were several plan A's they just you know the they were you know they sort of faded their a1 a2 a3 a4 but they faded over time as you know different things happen different different trades, different happiness with team, things like that.

Um,

we felt quite confident this was our best strategy, but I would say it's not to be recommended.

I really don't think people have tried to like write, oh, this is like a new way to do things.

I really don't think so.

We, we, given our team, given how our contracts laid out when I came to Philly in 2020, uh, this we thought was the right approach.

Uh, but it uh could have, we would have been doing what I was talking about, like sort of a waiting move again,

if we were into plan B, where we were

doing moves that could be flexible down the road if the, you know, the next Paul George became available.

But

this one, obviously, there's risk to any move because, you know, again, only one team wins, so the math is horrible.

But we ended up sort of on the, we ended up like, we had sort of Maria's arc there.

We had a last season was sort of our, you know, we lost whatever.

We didn't, we didn't have a great year.

And then, you know, then we sort of got the front office bracelet

in that we were, we hit on the sort of the high end of what we were hoping to do this summer.

We'll be back right after this.

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What are the incentives like for

regular season versus maximizing championship potential?

So, you have a undoubted superstar, Joelle Embiid.

Um,

and you listen to all the NBA podcasts, and they're like, we think that Joelle Embiid

should rest more in the regular season.

I mean, do you, A, do you have a plan?

Um,

and B, philosophically, what are you trying to maximize?

Because if you're bringing your 13-year-old daughter to the six-years game and buy some nice seats, and it's who's your backup?

It's not Mo Bamba, who's your, you know, Andre Drummond.

Yeah, come on, man.

I mean, you know, look,

it's a drop-off, drop-off, I say, in excitement.

I like Andre Drummond.

Well, Andre, right now,

I think it's a drop-off.

He keeps trying to do things like Joelle in the preseason, which has had mixed results.

But

we love Andre.

He's definitely going to buff it when Joelle's out.

Look, I mean, we definitely are optimizing for the postseason.

A lot of the analysis you see out there isn't very well structured.

They do all these hyper-correlated analysis, like, oh, teams, in the top four are the ones that win.

Well, yeah, if you happen to get, if the Warriors had gone through a year when they had Kevin Durant where everyone was hurt, but then they were healthy for the postseason, I'm pretty sure they were going to make the finals or win it that year.

So,

you know,

for us, it's like if there's one guiding principle, it's just it's the players stupid.

Like, it's just get...

get the best players and the analysis I talked about before of Shohei Otani, it gets even more pronounced in the playoffs because players go from playing 30 to 35 minutes to 40 to 45 minutes.

Um,

rotations shrink, so all the impacts of star players actually again go up.

Superstar players are also the playoffs, everyone gets worse in the playoffs.

When I say everyone, I mean on average, everyone.

Uh, some some get better, but in general, everyone gets worse as the competition level goes up.

But superstars drop the least, so they they

they don't fall as much as pretty much everyone else.

And there's not much advantage to,

I mean, if you start as a seven seed, then it's not actually that harmful, right?

Sevens become a little more harmful because of the play-in.

Oh, you're in the play-in.

So

six is fine because, yes,

you know, a seven-game series where you're

one more on the road turns out to be not.

I think that's a pretty small swing in percentage.

I think it's like 2% to 3%.

It's not massive.

Why did

the NBA get religion on analytics

after baseball, I suppose?

But maybe not that much afterwards.

Oh, I think

maybe at the league level?

I think before.

They were the first to do a lot of analytics on the business side that was shared with teams.

So I would say the NBA was sort of for the teams on baseball were before the teams in basketball, but at the league level, I think I'm pretty confident the NBA was first.

yeah

so my pet theory is that uh

this is because the nba tends to attract new money owners so people in finance or tech who not some old magnate of some shitty beer company you're not to demean by the way we sponsor us bush bush and blood light we want your sponsorship

You can advertise your hard seltzer products.

One of the top agents in basketball is like

the nephew of the Bush, Anheuser-Busch Empire.

But yeah, no, I think you're 100% right, Nate.

The owners,

both the price point

and the sophisticated owners who were buying in in the late 90s through the 2000 to the 2010,

2015 range, they all sort of saw the NBA getting more global,

getting bigger.

They saw baseball declining.

They saw the cat, like the cap system in the NBA as better.

And so, yeah, all the sophisticated owners came into the NBA, I think, before pretty much all these other major leagues.

Yeah.

When you're watching a game,

would you say you're...

I know the answer to this question, so don't lie.

Are you relatively Zen when you're watching a game?

If I'm watching, I'm very not Zen.

Yeah, that's why I know it.

Make a terrible coach.

I even have a formula, sadly, for when I go nuts.

And it's basically just like when the win probability of either a game or even a play goes way up to where you start, as even a probabilistic thinker, you start to go to one instead of 0.9, you know, in your head.

And then it doesn't happen, especially if it doesn't happen for some really dumb reason that could have been prevented.

It gets, yeah, that gets really annoying and hard given how much time and work and effort goes into things from the front office, from the players, from everything.

So, example, you know, you're up 25 in a playoff game, you know, that and you lose it, that gets tough.

Or, you know, the small ones which are dumb, which is like breakaway.

We get a steal and it's a breakaway, and the guy, like,

you know, gets fouled from behind, but they don't call it.

You know, that, like, that kind of stuff just throws me for a loop.

It makes no sense, but it does.

Yeah, I'm very zen when

the odds of winning drop very low.

Uh, I just sort of like try to like learn things at that point.

That's called fatalistic not zen.

Yeah, I call it pessimistic optimism.

That's my

is it called fatalistic or nihilistic?

Yeah, at that point when you're like, okay, there's just no way in hell this is happening.

So so what would be the poster equivalent?

Like you're in a hand that you you've you're you're pot you're heavily pot committed.

Like the right strategy is still to stay in the hand even though your your odds of winning it at that point, you know, have to be like 20% or something like that.

No, I mean, I think, I think in poker,

you know, being Zen is quite important.

And I would say there's no situation where you're pot committed and you have to stay in the hand if you think your odds have dropped to 20%.

As long as you have any chips behind, you can always fold.

And I think that that's really important.

And I think that people who get too emotionally invested forget that.

They forget that you are always allowed to fold.

and they get to this point where, like, no, but like, this was supposed to go this way, and so they like end up putting those final chips in the middle.

And I've done that, and I've written about doing that, and it's a horrible feeling, you know, when you like either when someone else goads you into it, or when you goad yourself into going broke, even though you like you knew that you were beat.

Yeah, um, and so

on your trip sixes or whatever it was to knock you out of the World Series at Place 87.

How's that?

Were you?

Daryl, if you're gonna bring that up,

this is the

Beatles.

The 27 consecutive missed three-pointers.

We only missed 25 because the league report after said they filed us on two.

So

the official record for me is 25 misses.

Well, you asked how Zen I was, so it seemed imbalanced for me to ask how Zen were you.

Wait to deflect, Nate.

Wait, deflect.

I mean, you don't really, actually, it's a little bit ambiguous.

You don't really have any influence over the game.

I've talked about this before.

What are you allowed to communicate to other people that are on the floor during the game?

So it's actually even gotten more ridiculous.

So they, they, at first the league,

even when I first started the league, like 2004, I joke with them in a very, you know, geeky, nerdy way, unfortunately.

They, they banned electromagnetic signals to the bench.

Like, you couldn't text anyone, you can't call any,

well, it was all data calls by then.

So, but you could still, I could still sit behind the bench, two rows, and yell to my, so vibrating molecules are fine for communicating, but electromagnetic signals not allowed by the league, which to this day, I believe that's the rule.

But then they made it even worse.

This year, they passed a ridiculous ban on anyone using cell phones 45 minutes before the game till after,

which we'll see how that goes.

But yeah, I can still sit behind the bench and yell to my heart's content.

Hand signals?

Yeah, smoke signal like the Popes use.

We can do that.

We have lots of, yeah, that we can...

Well, no, it's electric.

Oh, shoot.

I screwed up.

We're allowed to use the electromagnetic spectrum in the visual range.

I'm sorry.

So we can use the ones our our eyes can see we're still out of use, but all others are banned.

So, yeah, so I

to answer your question, I don't have much impact.

Sometimes there's some halftime things where I'll mention something,

but our coaches are very good.

It's never anything relevant that would change the outcome of something.

So

are there examples of where the nerds have gone too far?

Things that were kind of superficial conclusions based on analytics?

Yeah, I mean, hot hands, the easy one.

Yeah, I think anyone who played, which I did play, that was, you know, Best Bows, my sport.

I wasn't very good.

I couldn't play at the pro level, of course, but you do sort of get that feeling of muscle memory and all that.

The hot hand was thought to not exist mostly because they didn't factor for people who think they're hot shoot really hard shots.

So once you adjust for that effect, there is a hot hand effect.

That's one.

I think,

gosh, there's got to be a bunch.

I mean,

clutch performance, you are the former

possessor of Ben Simmons' NBA playing rights.

Yeah, I think that one's a tough one.

No, they're

you just never have enough N to confidently say, but for sure, when people look back, they can show player X or Y was more clutch and high-leverage moments.

But no one's been able to show that they could predict that, that you know ex post

so

um clutch is a good one

and we'll be right back after this break

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We're going to try to wrap up in the next few minutes.

I want to call out Nate, though.

I have to call out Nate.

I was vlogging yesterday.

Yes, please.

So, Nate, being a very good Chicago grad,

assumed efficient market theory is correct.

And

he managed to stumble into one of the areas of which there's thousands of papers where it's not correct.

And there's lots of hypotheses and even some leading hypotheses why it's not.

So he took an anti-momentum stance.

And to be clear, you have to get very, very geeky and say, yes,

it is mostly a random walk from day to day, which I think you mentioned.

The stock market we're talking about.

The stock market.

Yeah, we're in the stock market.

But you use like the stock market as a proxy of like momentum can't exist in political markets or probably doesn't exist when momentum is for sure a factor to use the quant so ray iwanowski who used to run quant at goldman stacks and i you know i i have a lot of money in that factor because it it's worked for a hundred years hundreds of years and they think that momentum is a real thing in the stock market that you can trade on even though everyone knows it it breaks every for a couple reasons one

uh they think that there's a lot of papers on people are slow to react to information.

So, you know, there's some news, and people don't at the beginning realize how big that might end up being until multiple days later.

So, of course, you can be wrong, but again,

the overall bet is that momentum does slightly work and you can trade it.

The second one is that there are these, you know, to use a poke, there are these whale insiders that move markets, and you're basically free-riding on their information when they

first make those bets.

So, those are two of the reasons.

So, number go up, bet on number is their winning strategy.

If done very carefully and sophisticated, I would definitely recommend that both of you put

some percentage of

your wealth in a momentum stock because it's

you know, it's similar to, do you know about the long shot bias in gambling?

I'm sure you do.

Sure, yeah.

So

people

don't like to bet sure things.

They like to bet long shots.

So because of that, the sure things

have this long, long history, and it still exists if they let you put any money down.

It still exists that if you bet the favorites and you bet that with enough money that you can

that you can you know overall win essentially and I know people have funds that do exactly that.

Oh, there's one last reason they think momentum still exists, NAIDS.

That's because people hate losing their money, right?

And there's a fatter

tail on the downside of momentum than there is on the upside.

Does that make sense?

So, so you're more likely to lose big with momentum strategies in

certain market environments than others.

But over time, I hadn't thought about that.

Yeah, but over time, it absolutely wins over 100 years plus.

Yeah.

Yeah.

Oh, can I ask, though, given you just got a crash course in quant momentum, is there any...

I would think one of those fits that if people are betting heavily on Trump or

Kamala, that there may be signal that the market hasn't picked up yet.

I am skeptical about empirically

the betting markets underperform okay uh under form polling based methods got it i mean it's been weird can there both be let's say you just took polls can you is there momentum to polls and potentially there's a good question yeah i mean it's You can get these feedback effects, and it's a question as to whether they're real or whether they're fake, right?

But like in principle, a candidate has a good poll that gets good media coverage, which gets more polling.

But then the equilibrium kind of shifts because people get bored and now expectations are higher.

So you kind of wind up with like a sine wave pattern.

But yeah, no, I mean, it's, it's a lot of things where

to a first approximation, ignore the hot hand, ignore momentum.

Then you start studying it.

It's like, okay, now we're advanced enough where we have to think about the second approximation and the third order effects and so forth.

And, and, you know, the sophistication of the NBA now or of Wall Street or of poker are such that like you do have to take into account the edge case stuff sometimes.

Can I ask you, Maria?

Because you're probably the best poker player on here, is my guess.

How much.

You are winning the World Series of Needles against State today, too.

Do you?

Do you,

what is, what is the meta?

Like, do you have to train with like a solver all the time?

Or do you just play a lot?

Or how do you get reinforcement learning?

Yeah,

I think these days,

because the solvers are quite good and there are really great

AIs that you can play against, I think that that's actually quite important so that you can get that feedback and see what the optimal strategy would be.

And then it's like with everything, right?

That's your baseline.

And then you absolutely deviate, right?

Because the people you're playing against in large field events do not play like the solver, right?

Unless I am playing like the 10 best players in the world, like they're not going to be playing optimal strategy.

And sometimes they don't even understand what optimal strategy is in the sense that like so aren't there mixed is aren't there mixed player simulators or simulators yeah yes well no there aren't there there really aren't unless unless what you do so you can play around with the ranges right this is like any algorithm garbage in garbage out

right and good stuff in good stuff out um and so you make assumptions about hand ranges before you before you do any of this before you run sims before you kind of do a hand deconstruction where you say i think the player in this position is opening these hands right and i think that this player is playing these hands.

And you can be right or you can be wrong, but there's a thing called node locking, which is something that you can do when you mimic.

bad players, right?

So you can node lock it to say, okay, no, you're telling me that the correct thing here is to raise, but I'm going to say that this person never raises, right?

So I'm going to node lock it.

So raising is not an option.

I've been node locking my whole career.

I've been node locking.

So then you can see how the strategy changes.

So you can play with the solvers to show you how to deviate against specific opponent types.

But, you you know, as Nate said, like,

when it comes to

anything, like, it can be dangerous.

Like, you need to make sure you really understand the baseline and that you really have the ground strategy

really solid.

So, you have to do both.

But these days, I do think you need to use the solvers and the analytics

as well.

So, I think that's important.

And I know that we're basically out of time, Nate, between you and Daryl needling each other.

It was definitely a nice reality TV edition of Risky Business.

So I hope everyone has enjoyed that very much.

And I've loved being, I've really enjoyed just being a fly on the wall for those back and forth exchanges.

I love it.

Let's do it more, Daryl.

We'll have to have you back.

He resisted any Knicks zings.

So I appreciate that.

Thank you, Nate.

Daryl, I mean, look, it was a great series.

You guys fought hard.

You guys fought hard.

It was an excellent basketball series.

And as a Knicks fan, I was happy with the outcome.

So thank you for that.

And thanks for coming on.

All right.

Thanks.

Thanks, Brayna.

Thanks, Nate.

Let us know what you think of the show.

Reach out to us at riskybusiness at pushkin.fm.

Risky Business is hosted by me, Maria Kondakova.

And by me, Nate Silver.

The show is a co-production of Pushkin Industries and iHeartMedia.

This episode was produced by Isabel Carter.

Our associate producer is Gabriel Hunter Chang.

Our executive producer is Jacob Goldstein.

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