Hold on to your prepaid credit card, because the world of high finance just become closer to an online casino. Investing and poker have often been compared.
But it's not surprising that financial recruiters for hedge funds and broking houses are scrutinizing professional poker to find talent and analytical tools.
As Bloomberg reports, they think it's a good fit because both pursuits require a rational approach toward risk, self-control, speedy decision-making under pressure, discipline and a well-trained memory. And given the number of hedge fund managers and brokers who have screwed up badly over the last two years, it makes sense that the industry is now casting its net wide to find talent.
Yes, there are some similarities between poker and investing. Both are solo occupations, you need a business plan and strategy for both, serious people seem to make good money, you need to understand how probability works and you need an element of luck.
I would add another tip: the money you don't lose buys just as many things as money you win. In other words, you actually save money by lowering risk and avoiding overpriced stocks.
Hedge fund manager David Einhorn plays a mean game of poker. ""Both poker and investing are games of incomplete information," Mr. Einhorn told the New York Times. "You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical."
Maybe he has a point. But there's one difference between gambling and investing. At least with gambling, you know the odds.
That answers the question “What do you get when you combine the wisdoms of Nicolas Taleb and H L Mencken?”
http://en.wikipedia.org/wiki/Ludic_fallacy
http://www.quotationspage.com/quote/858.html