Washington Post Shows Why Poker is Good for Investors
Written by RogerCP | Tuesday, January 26th, 2010
An article that ran in the Washington Post today claims that playing poker can help people become more astute investors. The piece, written by Bob Frick and entitled Poker Has Lessons for Investors, draws interesting parallels between poker and investing by outlining the psychological issues that make these two concepts “identical”.
The common issues listed were greed, overconfidence, regret, seeing patterns and holding losers and the article shows how poker can be applied to them, or at least recognized.
Take the issue of overconfidence. Poker professional Vanessa Rousso is quoted in the article as saying: “In tournaments when I’ve won a series of hands, it tends to make me loosen up and take excessive risks.” This overconfidence factor is also recognized in the investment field when many people boost their stakes in riskier investments during a stock market boom. Rousso advises players to recognize when they’re deviating from their game plan, and this tip can be applied to investment as well.
Another concept examined is that of ‘holding losers’. The article shows that it is difficult for us to sell a losing investment. When looked at from a poker point of view, a direct comparison would be folding a bad hand, even though it hurts to admit that selling a losing stock removes the “last shred of possibility that you might have been right”.
The article says that “successful poker players know that the key to accumulating wealth is relentlessly making the good decisions. If you do that long enough, you will make money in either game.”
The article also looks at regret as another paralleled trait. According to Daniel Negreanu, poker pro, “the toughest thing for a poker player to do is quit when he’s losing.” Poker players facing a tough break may play too conservatively or they try to make back their losses.
Investors can sometimes become frozen from regret following a bad market or a poor decision. In both cases, poker players and investors are advised to take a long term view of the situation “and get back on the horse”.
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· Written by RogerCP · Filed Under Poker News · Comments Off
