For my money, valuable insights into the market for technology stocks came not only in the company presentations, but also in a poker tournament the forum sponsored as one evening's entertainment. Although I attended the forum simply as an observer, the opportunity to play poker with some of the best minds in the business world and a nine-time Poker World Champion was just too much to pass up.

The Tournament

The tournament at the forum followed the same format as the World Series of Poker at Binion's Horseshoe Casino. The World Series has been so successful that a statue dedicated to its most powerful patron, Benny Binion, stands on a street corner in Las Vegas. Binion received this honor for some specific reasons. First he eliminated any restriction on the size of bets. If you like your cards in the World Series of Poker you can bet every chip in front of you. Then he opened the tournament to the public. You can't play tennis at Wimbledon unless you are invited to play, but anyone with $10,000 to lose is welcome to try his or her luck at the Horseshoe. Binion is also remembered in Las Vegas for running an honest game in his casino, although this scruple required him to carry a sawed-off shotgun in his car.

The Difference Between Investment and Poker

Although on the surface investing and gambling have some similarities, they also have some fundamental differences. Since gambling and investing both involve uncertain outcomes, there is a tendency to see them as identical. Yet the purpose of investing is to make an outlay of money for income or profit. The purpose of gambling is to make an outlay of money to play a game. In mathematics, gambling is a zero sum or win-lose game. You can only win if I lose. Investing is a non-constant sum game which means win-win outcomes are possible (but not inevitable). Another difference between gambling and investing is the participant's attitude towards uncertainty. One of the primary goals of investing is to eliminate as much of the risk as possible - which doesn't make for a very fun game.

Despite these fundamental differences between investing and gambling, few jobs in the world are better preparation for playing poker than portfolio and hedge fund management. Fund managers implement investment decisions and optimize portfolios through continuous monitoring. They have daily experience in dealing with uncertainty and making quick decisions, often involving large amounts of money. Many fund managers are mathematically gifted and have studied subjects such as mathematics, computer science or statistics at MIT, Harvard or Berkeley. Many of them deploy derivatives and rely on risk analytics as part of their investment strategy. It is hard not to imagine most of them playing on the chess team in high school.

Texas Hold'Em

Tonight, however, the game is not chess, but Texas Hold'Em. Texas Hold 'Em is a poker game which starts when everyone is dealt two cards face down (the pocket) followed by an initial round of betting. The next three cards (the flop) are dealt face up on the table. There are communal cards common to every player's hand. The flop is followed by another round of betting. A fourth card is flipped into the middle of the table (the turn) followed by another round of betting. Finally, a fifth card (the river) is dealt face up, and a final round of betting begins. The common cards are used in combination with the two pocket cards to form a five card poker hand.

Like any game, Texas Hold'Em has its celebrities. One of them is the Pacific Crest tournament organizer - the nine-time World Series of Poker winner. At age 24, Phil Hellmuth was the youngest player ever to win a Series. Since then he has sat at final table 16 times and won a total $2,865,490. (I have no idea what he lost.) Now Hellmuth is in his late 30's, and is tall, dark and a sharp dresser. For his public persona, Phil wants to be marked as an accomplished, honest, and straightforward mid-western family man. To his credit, he seems as wholesome as anyone could be who is regularly exposed to the worst aspects of human nature. With his own web site (philhellmuth.com), a role in an upcoming movie, and new book, Play Poker Like the Pros, Hellmuth is poised to be the Jack Nicklaus or Tiger Woods of poker - assuming the game can break into the major leagues.

Many technology portfolios now resemble a Texas Hold'Em hand as funds share many of the same investments. As Roger B. McNamee of Silverlake Partners explained in a presentation about the new normal, the collapse of the market for new technology offerings has led to a collapse in the venture fund market, which will lead to delays in future public offerings. For as far as he can see, which is in 2006, the universe of publicly traded software firms will not expand significantly. This may explain the recent run up in technology stocks - the demand for profitable companies has outstripped the supply. In fact, through merger and consolidation, the number of technology firms is almost certain to contract. So by 2006 technology portfolios will hold the some of the same names they own today - just fewer of them and in greater concentrations.

The Game

For Texas Hold'Em, Hellmuth advises sticking to strong pocket hands: pairs, ace highs, king - ten, king jack, and king - queen, and playing very patiently. Helpfully, he printed a cheat sheet for our review, which many of us don't follow. To encourage the other players, I scrutinize my copy of the cheat sheet carefully and ask if it's really true that 3 of a kind beats 2 pair.

The players at the table are mixed lot in terms of their poker experience. For some, this is obviously the first time they have ever played. Others, like me, may have played a few games in college, while others are clearly not unknown in Las Vegas and Monte Carlo. Just as very few people think they don't have a sense of humor, very few people think they play poker badly. The same could be said for investors in the stock market.

Players and the SEC

Make no mistake, poker is all about losing. At the end of the night in this particular tournament there would be 31 losers and 1 winner. It is a term of approbation among gamblers to be called a player, not a winner. You don't have to win to be treated well, you just have to participate. No one ever hear anyone say "I'm going to Las Vegas to be a winner." That is why poker is a game and not a profession, although some people confuse the two. Only a month after the 2004 World Series of Gambling in Las Vegas, the 18th National Conference on Problem Gambling convenes in Phoenix.

The service Benny Binion provided with his shotgun at the Horseshoe Casino, the Securities and Exchange Commission must continue to provide today to keep the investment game fair. If Andersen had invested as much effort in complying with the Commission's recommendations as they did fighting them, the firm might still be in business today. This is a lesson from the poker world that the investment industry would do well to learn.

Investing is all about winning. Investments made wisely create more wealth for everybody. Even though the market for enterprise stocks resembles a round of Texas Hold'Em in that everyone in the game shares many of the same cards, if all 32 investors owned Siebel Systems stock and Siebel goes up, then everyone wins. >From my experience playing poker against a few financial professionals, I would conclude that most investors are better off letting these professionals manage their money. In poker it a truism that if you look around the table and can't identify who the sucker is, chances are it's you. No one should have to worry about that when it comes time to invest their savings.

Citrix Systems, Inc. and The Siebel Observer Proudly Present a New Chapter in Building the On-Demand Contact Center

Because of the growing role contact centers play in maintaining customer satisfaction and generating revenue, their importance has never been greater. At the same time, new technology and regulatory changes have made the work of planning, building and managing contact centers more challenging than ever. To help contact center managers chart a course through difficult waters, Citrix Systems continues to sponsor Building the On-Demand Contact Center with editorial assistance from The Siebel Observer.

This month, Bruce Calhoon of SimpliCTI, Inc. gives an in-depth and practical analysis of Interaction Management Software (IM). IM is a fundamental building block in multimedia contact centers and is the successor to Computer Telephone Integration (CTI). IM is used by contact centers to route and manage all forms of electronic customer interaction, including inbound and proactive (outbound) voice, email and Web communication. The road between concept and live production with IM is long, complicated and offers plenty of opportunities for wrong turns. This chapter of Building the On-Demand Contact Center defines IM and how to implement it in, specifically, Citrix® MetaFrame® Presentation Server environments. To read more, please click here.

Each month, the industry's most recognized systems integrators, independent consultants, and software and hardware companies will share their real world expertise. Every chapter of Building the On-Demand Contact Center will address the challenges facing contact centers and describe solutions that can be implemented today.