Poker and Investing - parallels

If someone told me that Texas Hold 'em (Poker) is a game of strategy and skill last year, I would have laughed and said that it was mostly luck.

Now I use both my investing experience/skills in my poker game and vice versa to some success. I will now attempt to draw some parallels.

1. There is no sure thing ..... unless you have a Royal flush, going all in is not a sure win. Same thing with stocks, there is no guarantees - as a result, always exercise caution.

2. Chip leaders dominate the game and bully the short stacks; in the stock market, money makes money and the large eat the small retail guys.

3. Stay cool, go in when you sense the opportunity, no need to play every hand and look for weakness in other players or strengths (use that to your advantage); with stocks, there is nothing wrong staying on cash and waiting, and buying when there is blood on the street/fear and selling when everyone is overly optimistic.

4. you have to see the flop to make money; same with stocks, you have to be invested to make money.

5. knowing when to fold in poker can save a lot of chips; same with investing - never catch a falling knife and know when to stop out.

6. watching your cards only is not a good idea, good players will take all your chips. Same with stocks, focusing on the stock's fundamentals/data alone is not sufficient as there are other macro and market forces out there can quickly sink a stock or cause it to go up. Smart investors do both, watch the "stock" but also pay close attention to trends, other investors, political and economic factors.

Several things that work well with both investing and poker - patience, discipline, playing the odds and watching what the other players are doing.

Good luck.