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Poker become a better Value investor?


ASTA
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I think that part of becoming a better investor is knowing faults that the population makes. I just started to play online poker with real money ($5) and started reading a book a bout it. But the level of excitement and odds decision one makes online is fascinating at a rapid pace. 

 

I found that I was way to aggressive as one should fold 90% of hands dealt according to gurus :D What is fascinating is how other players act. It almost is a mini stock market with the proverbial the stock market behaves like a voting machine, but in the long term it acts like a weighing machine at works here too.

 

So this got my thinking maybe I am just average and my stock market out performance the last 4 years is just by chance and risk.

 

Poker I think is therefore a good dose of real life fallibility as when one thinks ones hand is superior others have a better one. So like Munger waits 10 years to buy something he might be right. And I think I have been punching to many holes in my punch card the last 4 years. And poker is good at showing that. 

 

So if you are bored and want to see how wrong ones odds decision can be Texas holdem online quickly teaches you that :D       

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I think that part of becoming a better investor is knowing faults that the population makes. I just started to play online poker with real money ($5) and started reading a book a bout it. But the level of excitement and odds decision one makes online is fascinating at a rapid pace. 

 

I found that I was way to aggressive as one should fold 90% of hands dealt according to gurus :D What is fascinating is how other players act. It almost is a mini stock market with the proverbial the stock market behaves like a voting machine, but in the long term it acts like a weighing machine at works here too.

 

So this got my thinking maybe I am just average and my stock market out performance the last 4 years is just by chance and risk.

 

Poker I think is therefore a good dose of real life fallibility as when one thinks ones hand is superior others have a better one. So like Munger waits 10 years to buy something he might be right. And I think I have been punching to many holes in my punch card the last 4 years. And poker is good at showing that. 

 

So if you are bored and want to see how wrong ones odds decision can be Texas holdem online quickly teaches you that :D     

 

Interesting thoughts. Looking at it as basically an accelerated simulator of your probability skills.

 

A couple of thoughts on this. While you are playing with real money the stakes don't really offer a true simulation IMO of how you or others would behave at larger sums.

 

Also consider that the stock market has much different restrictions on the actors. In the market you have mutual fund managers, hedge fund managers, TAs, people with specific investment mandates etc... Their actions will not always be rational because of their constraints or motivations (window dressing a portfolio, focusing on AUM vs performance, can't buy stocks under 5$) and they can be forced to sell by redemptions. Just to name a few examples.

 

In a poker game the incentives and restrictions for everyone are the same. So I would argue poker is harder than the market because it is truly a game where the only advantage you have is how good of a player you are (unless you are cheating). So it would seem if you could be good at poker you should excel in the markets.

 

I know a few people who are or were pro poker players. Always interesting to talk to them. One of them told me once that the big "A Ha!" moment he had playing poker was when he realized that you only bet to make someone with better cards fold or to make someone with worse cards call.

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I played poker full-time for a couple years (and part-time for a few more) and there are a lot of things that carry over into investing. I think the #1 thing was coming to terms with variance. For a long time the ups and downs of poker affected my emotions and playing ability a lot, but eventually I got over it and stopped caring. All you can do is attempt to make the most +EV decision with the information you have and over time variance will even out. And thanks to the crazy amount of variance in poker, now I'm hardly bothered when my stocks drop due to Mr. Market being grumpy. I've really come to embrace variance actually. A guaranteed 10% a year would be boring, the ups and downs are what makes the ride fun.

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