Aug 17, 2012
The Strange Relationship between Poker and Investing
By RTR Dennis
At first glance, you wouldn’t think that poker and investing have much in common. The stereotypical investor is some suit-wearing, Starbucks-sipping, Harvard graduate who spends their days and nights watching stock market trends. In stark contrast is the typical online poker pro who dropped out of college, wears hoodies, and has a niche skill that few outside the world of poker can understand.
But as strange as it might seem, there’s actually a close relationship between investing and poker. In fact, many of the same skills that make successful investors can also be transferred over to poker games too. To illustrate this phenomenon, let’s look at some of the similarities between the two disciplines.
Tools of the Trade
While the principles behind being a successful investor remain the same, the tools have changed dramatically. Now stock market gurus use a wide variety of computer programs and software to analyze statistics and make informed decisions. In short, investing as a whole has improved thanks to the innovative products available today.
Online poker is quite similar because players rely heavily on cutting-edge software to improve their game and gain invaluable information on opponents. What’s nice is that they can even take advantage of free programs like the one at Carbon Poker to improve their poker skills. Rakeback is another great tool that can help poker players save money on their tournament/cash game fees.
Range of Possibilities
Besides the fact that both poker players and investors use computer tools to help them out, they’re also both dealing with incomplete information. Billionaire hedge fund manager David Einhorn – who finished third in the WSOP Big One for One Drop ($4,352,000) – knows quite a bit about this.
He discussed the incomplete information matter by saying, “There’s some information you know, there’s some information you surmise, and then there’s the future which is the unknown information and you have a range of possible outcomes. If you think about a poker hand that way, you have your cards, you have what you can surmise about whatever your opponents might have, and then you have whatever cards might come on the board that are uncertain.”
Einhorn finished by commenting, “When you invest, it’s really the same. There are the things you know about a company or the world or whatnot, and there are things that you surmise, you don’t know, but you kind of assume. And then there’s the future, which is the range of possible events in the future.”
Hybrid Investor/Poker Pros
Seeing as how both investing and poker have their similarities, plenty of investors have experienced success on the felt. Dan Shak, who’s made millions in the gold market, has also staked his claim in the poker world by earning $3,767,756 in live tournaments. Although not quite as rich as Shak, Andy Frankenberger has also proven to be a master of both disciplines. The former Wall Street trader transitioned to poker three years ago and has already made $2,535,857 in tournaments.
As more and more people realize how well investment skills translate over to poker, you can expect an influx of traders trying to see if they can experience poker success like Einhorn, Shak and Frankenberger have.