Rule Du Jour: Rule #8: Know Poker (Patreon)

Rule #8: Know Poker 

I played a ton of online poker in the late 1990’s and some live vegas tournaments.  I was pretty good at it.  The funny thing was I did not know it was also helping me enhance my investment skills. 

Let me explain how Poker Makes you a better investor:

• Risk management: Poker teaches players how to take calculated risks and make decisions based on incomplete information, which is crucial in investing and trading.

• Understanding probabilities: Poker players constantly assess the odds of different outcomes, similar to how investors evaluate potential investment scenarios. This is key to all my valuation models for all assets.

• Decision-making under pressure: Both poker and trading require quick thinking and clear decision-making, often with significant money at stake.

• Reading opponents: Poker skills in analyzing opponents' behavior and this helps me analyze wall st analysts - do they have an agenda? Are they full of shit ie Bluffing? Or just faking it.   

• Bet sizing: Proper bet sizing in poker is similar to what I call Allocations - Rule #7 Allocations Matter.

• Emotional control: Successful poker players learn to control their emotions and avoid tilt, which is also critical for traders.

• Zero-sum game mentality: Poker is inherently zero-sum, helping players understand it is you against another… the Q is are you smarter than they are?  You have to be or else you will lose.  

• Adapting to new information: Poker players must constantly update their strategies as new cards are revealed, similar to how traders adjust to new market information.  Know When to Hold 'Em, Know When to Fold 'Em

• Long-term thinking: Good poker players focus on making positive expected valued decisions over time and are patient and will not risk blowing up their bag aka getting rekt  

• Comfort with uncertainty: Poker acclimates players to operating in uncertain environments with imperfect information, a key skill for investors.