Re: It\'s time for poker players to start putting their money to work.
Why I think poker is relevant to being an investor (not irrelevant to trading, btw…I just think its excellent for investing)
1. Reading tells. Non professional investors do not understand that hundreds of millions of dollars are moved after a single meeting with top management, often on very subtle interpretation of what is said and how.
2. Understanding risk/reward. You can be a great investor and be wrong as often as right…its just key to be right big and wrong small.
3. Not going on tilt, withstanding negative variance. Investing is a wildly emotional business for most people. If you allow these emotions to affect your decision making its very expensive. I have seen it ruin careers.
4. Pattern recognition (I believe this is numero uno). Stocks, like poker, lend themselves to saying “when this set of events/circumstances/factors converge…the outcome is generally xxx.” This was my strongest skill as an investor.
5. Math. Nice, but not crucial.
6. Related to #3…ability to handle losing on a constant basis (gross losses, not net).
7. Comfort and skill in making decisions in an environment of partial information.
8. Intellectual arrogance…by this I mean that the best investors’ believe that they have the ability to see things more clearly than others and can make money despite the Efficient Market Hypothesis…you have to think you are just flat out smarter than most of the other people in the market. You have to have this confidence in poker, too (I understand it’s a fine line between reckless arrogance and confidence...)
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