Re: Difference Between Poker and the Stock Market
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Another huge difference - luck is a major factor in poker and has very little effect in stocks.
You can play poker well all night and triple or quadruple up on your buy-in, and get all-in with a 5 to 1 edge and lose it all on one hand. You can say that over time you should win most of those hands, but there's nothing that says you will. In the stock market, if you've done your work, luck plays a very small role.
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The market has a high level of variance (luck factor). Part of the skill of poker and the market is to understand this variance and know how to react to it. Benjamin Graham felt how you handled variance had a great effect on your results:
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If you put in your work, luck has very little to do with your results.
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Just because you buy a stock that you believe has great value, it doesn't mean the market will recognize that value right after you buy it.
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That's why I don't trade that way.
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