Original source: SimoleonSense.com .
Click Here To Read: How Poker Can Make You a Better Investor
Introduction (via Kiplingers)
Ever watch professional poker players calculating the odds, then coolly dissecting their opponents? Many of the same skills the top players use can help you be a better investor. Success at both investing and gambling, it turns out, has much to do with controlling emotions. And playing a little poker can help you recognize, and avoid, emotional traps that endanger your most important stack of chips — your portfolio. But you need to know what to look for.
The psychological issues that drive investing and gambling decisions aren’t merely similar. They are “identical,” says Andrew Lo, director of the Massachusetts Institute of Technology Laboratory for Financial Engineering and one of the leaders in the field of behavioral finance (listen to our podcast with Lo). It’s easy to find investment professionals and professional poker players who agree. Says poker pro Daniel Negreanu, who holds four World Series of Poker bracelets and two World Poker Tour Championship titles: “Having emotional stability and emotional control is key to both investing and poker.”
Can you gain that control at a poker table? Aaron Brown is among many who think so. Brown is a onetime finance professor and former portfolio manager for Prudential Securities who is now a risk manager for hedge funds. He’s also the author of The Poker Face of Wall Street (Wiley, $17). Says Brown: “People tell me playing poker is risky. Investing for a financial lifetime without playing poker is risky. I’d much rather make these mistakes at the table.”
And by mistakes, Brown means the common emotional errors that plague investors. The burgeoning fields of investor psychology and behavioral finance are uncovering more about these errors all the time, and they are the subject of a year-long series co-produced by Kiplinger’s and Nightly Business Report on PBS.
6 Ways Poker & Investing are Similar
Greed
Overconfidence
Regret
Seeing patterns
Holding on to losersClick Here To Read: How Poker Can Make You a Better Investor
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