Shiny Object Syndrome 101
If you count cards, you could take Vegas for millions, or maybe you'll overdraft your checking account at a Denny's ATM.
401 Que? is a second-generation American’s flailing journey toward financial literacy. If you’re here for stock tips and crypto advice, you’re in the wrong place. Subscribe here:
DISCLAIMER: This post is NOT about counting cards. That’s just, like, a metaphor or whatever. Bear with me. You won’t have to do any math.
I REALLY wanted to go to the Bahamas my sophomore year of college, but I didn’t have the money. You know what did have the money? My newly minted Boston College Eagles credit card I picked up at Alumni Stadium following three hours of tailgating. Zero APR for however long the buzz lasted. That Bahamas vacation was one of the best trips of my life. It was also the beginning of credit card debt that would plague me for most of my adulthood.
Bringing Down the House
Another sound financial strategy I learned at Boston College was counting cards. One of my roommates lent me a book that hooked him on blackjack and card counting, Bringing Down the House, which was later adapted into a film starring Kevin Spacey (R.I.P. his reputation). The movie is entertainment pap, but the book is chilling. I recommend it if you like nonfiction thrillers. It’s about six MIT students who developed a card counting system, which they used to win millions of dollars in Las Vegas. Things go bad. Threats are made. Mobsters appear. Yadda, yadda, yadda. Point is their system was outlined in the back of the book. We learned it.
My roommate ordered a card shuffler, which randomized the cards, ensuring the validity of our experiments. He also bought a “shoe,” the card dispenser dealers use in casinos, to replicate the casino setting.
How To Count Cards
DISCLAIMER Redux: OK, there is SOME stuff about counting cards. It’s really not about that, but if this part bores you, you can skip down to “TL;DR” in the “Basic Strategy” section.
Counting cards is easy. Well, maybe not easy but simple. If an English major like me could manage it, most people can. There are more complex systems that employ advanced techniques, like card tracking based on where the dealer cuts the deck, but that’s straight-up sorcery. No, the system we used was straightforward, and it goes like this:
The premise is that the “shoe,” or the total number of cards in the card dispenser, usually made up of six to eight decks of cards, will get hot or cold. “Hot” means there are more high cards in the shoe. “Cold” means there are more low cards left in the shoe. For reasons that now escape me, determined by mathematical minds superior to mine, a shoe with a greater number of high cards statistically benefits the player. Don’t ask me why, but it works.
When you see a ten, a face card or an ace, subtract one. When you see a low card (2-6), add one. If you see a 7, 8 or 9, keep your current tally. The more positive the shoe, the better your odds. That’s when you start to bet big.
Oh, and you have to know how to play blackjack.
Blackjack Basic Strategy has nothing to do with card counting. It’s about knowing how to play the game. It’s about knowing when to hit, when to hold, when to double down, and when to split. There are blackjack charts available, like this one, that enumerate every possible permutation. It’s not rocket science, but it requires a lot of memorization.
TL;DR: Card counting doesn’t work without Blackjack Basic Strategy.
If your Blackjack Basic Strategy isn’t flawless, you’re wasting your time counting cards. Even if it is flawless, there’s still a catch: You need a big enough bankroll to make it work.
You have to be able to sit at a table long enough for the shoe to get hot. That could take a while. You might go through four, five or ten shoes before you hit on one that gets really hot. That could take hours — hours you’ll spend bleeding money. Depending on the table minimum, you might lose thousands of dollars before a shoe gets hot enough for you to capitalize on. You need a big enough bankroll to weather those long droughts.
Credit Cards vs. The Stock Market
A few years after graduating college, I asked my former roommate, now an investor, what I should do with the few grand I’d managed to squirrel away since we practiced card counting in our off-campus colonial in Brighton. Should I put the money in a low-risk mutual fund, or should I let it ride on a hot stock? He asked me if I had any credit card debt. When I said yes, he told me to pay that off before doing anything else.
He explained that whatever return on an investment I might gain would be outstripped by the financial colander that is credit card interest rates. I needed to stem the financial hemorrhaging before investing. This applies to all accrued interest on debt, including car loans and student loans.
Shiny Object Syndrome
I’ve long suffered from Shiny Object Syndrome. In my twenties, I wanted to buy land in Cyprus (my former brother-in-law is Cypriot), as the country was poised to become part of the E.U. In my head, I was a real estate tycoon already. I’ve dreamed up entertainment apps and a transportation tech invention. Maybe one of those ideas could’ve been a solid investment (eh, probably not), but I would’ve needed to get my house in order first to pursue one of them.
Instead, I made poor financial decisions. I got a terrible deal on a car loan because I didn’t know that you should figure out the loan ahead of time. Instead, I pointed at the car I wanted and applied for a loan on the spot at a USED CAR LOT.
It’s easy to be lured by the promise of big returns of investment —the magic pill, the silver bullet, the get-rich-quick scheme, the shiny object — especially if the debt you face seems insurmountable. Paying off your credit card over the course of 18 months isn’t sexy but playing the stock market today is. Negotiating for a 401(k) match with your employer isn’t exciting but investing in crypto is (or was — yikes).
When the room is dark, we’re drawn to shiny objects. But a shiny object doesn’t light up the room. It just gives you something to carry.
That’s not to say higher-risk investment strategies don’t work. It’s that they don’t make sense if you don’t have the fundamentals down pat. If you’re going to take risks, make sure you have a bankroll.
Next week’s newsletter: The Pay Gap for immigrant women and Latinas.
Check out the last post here: “The Debt Heritage”
First column of yours that I have read. Like your writing style. My favorite line in this column... " a shiny object does not light up the room. It just gives you something to carry." Great observation.
You had me at "My newly minted Boston College Eagles credit card I picked up at Alumni Stadium following three hours of tailgating."