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Yes. You shuffle (deck and discard pile) then discard anything you don't like in your hand (forming a new discard pile), then draw up. This means that the dregs of your previous hand won't show up in your deck for a turn.
edit: and I made the exact same mistake my first couple games. Having the shuffle each turn means there's luck in what you draw over the course of a turn, and not just which order you go through your deck in.
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