Poker for Traders

Somehow, I over looked this terrific article by Doug Kass, comparing poker with trading.

Here’s a few bullet points:

• Understand when to play aggressively. It’s the winning way. Don’t be a tight or loose player/trader; be a solid one and recognize when it is time to press your bets/positions. To attain superior returns in poker and investing over the long run, grind it out (in stocks until you are up 30%-40%, and then if you have convictions, go for a 100% year). If you can avoid losing and put together a few 100% years, you can achieve outstanding long-term investment performance.

Tells: Look for them, and you will find them. Poker players and stock markets have tells — giveaway moves that are very revealing. Learn to recognize them. History is your textbook. (For example, improving corporate financials usually presage a rally; conversely, deteriorating financials usually augur poor market performance.)

• Art and science … it takes both. Both activities are more art than science — that’s why they are so difficult to master. Knowing what to do is about 10% of the game. Knowing how to do it is the other 90%.

Money management. The same sound principles of money control apply to the business of tournament/professional poker and to successful investing. The way to build long-term returns or poker winnings is through preservation of capital and home runs.

This was originally published on the very expensive Street Insight; It since ahs been moved to the free site — so go see the entire piece.

Poker Is Flush With Insight for Traders
Doug Kass
Street Insight, 1/25/2005 7:20 AM EST

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