To start with, my answer would be “yes”…..to a certain extent, yes. And I’ve my logic supported by some of the best names in the capital market.
In 2011 a simple reply to a tweet by John Chew, a businessman, made the corporate world sit up and think. It was: “I would take a good poker player over a newly minted CFA any day–all else being equal.” But that was not the time when Poker entered the corporate world in a big way. No.
Long before that in February 2003 in his wonderfully written book Poker Nation journalist and poker fanatic Andy Bellin writes: “Poker is beautifully simple, wildly complicated, and in its essence, pure Machiavelli and Sun Tzu, if one plays better than the other, if he out-thinks and out-strategies, then he will win the most money. Poker isn´t about the number of pots you take down, or how fantastic you look winning them. Claiming a pot when you have the best cards isn´t enough to make you a winning player. Remember, there is no grand pay scale for holding the best hand. No one gives you a pile of money for drawing a royal straight flush. Some sucker has to pay you off.”
Yes, some sucker has to pay you off….when you are a stock market trader. Remember, Andy Bellin was not a jerk, he became an editor at the Paris Review, the world’s most respected literary journal.
Now Poker gets a special reference whenever investment gurus speak about their strategy. It is said that to become a great penny stock investor you must be good at poker, and vice versa. Poker is a mind game and highly preferred by the stalwarts of the capital market. After all, investors only want to maximize their winning investments.
Poker and investment have a lot of similarities and each follows a similar process. Both involve prudent risk management, working with imperfect information, and taking decisions that make the risk to reward ratio in your favor. When you’re trading, you always have to trade with an edge. You can’t get to the point where you are simply making gambles, but rather you must repeatedly put yourself in favorable risk-reward situations. While you can never predict with certainty a move in a stock or market, you can limit yourself to the best setups. Charts and price movement represent the emotions of the herd and it is a trader’s job to analyze those emotions and position themselves on the correct side.
Its importance has been seriously understood by the policymakers as well. Massachusetts Institute of Technology (MIT) offers a course on ‘Poker Theory and Analytics’ whereas in India, the Indian Institute of Management (IIM ) Kozhikode, has also introduced this unconventional way to hone the leadership qualities in students.
But is it really correct to say that playing Poker can make you a better Investor? To a certain extent, yes.
To win in games or investing, you have to be at least one step ahead of your counterpart. Many successful names believe that playing poker is the best off-time activity to improve investing skills. Some well-known names who play poker are Jack Ma, and David Einhorn, co-founder of the hedge fund Greenlight Capital.
So start playing Poker, but play at a good place that has licensed, pay taxes and cashouts are fastest. This mind game will certainly do wonders and help you in taking strategic decisions while investing. Anything that forces you to think predictably about the consequences of your actions, and how others will respond to them, helps you in investing.