Poker preparation for Wall Street

While steel nerves and a sharp intellect are character traits
shared by both card sharks and stock market gurus, more often than
not, it can be the playing of poker which develops the qualities
necessary to begin investing.

As light-hearted gamblers learn after losing their wallets to
the poker pros, only the aggressive survive. Being assertive is the
first step toward a lifetime career in trading. With this in mind,
students interested in the stock market can begin to learn an
aggressive lifestyle at local poker games.

Whether or not you know it, when you join a poker table
you’re declaring this statement: I’m here to take your
money. You may be sitting with lifelong friends, but when you join
a game, you are telegraphing your want of their money.

For every benefit there’s a cost. If you want more money,
it will come at the cost of the players around the table ““
best friends or strangers. The player who is willing to take even
the last dollar bill out of his best friend’s tuition fund is
the type of gambler who is ready to learn more about trading
stocks.

Conversely, what are you declaring when you buy stock? You
believe the price is going up. The seller believes the price is
going down. For every share you buy, assuming normal trading
circumstances, another person disagrees with you.

Investing is putting your wits against everyone else’s.
Every share you buy is a bet against you.

Gamblers who can thrive in a friendless world are potential
candidates for trading.

Even still, a profitable career in either stocks or cards needs
more than a forceful character. Raw animal spirits may guide the
alpha-trader, but durability is needed for the long-term profits
and the short-term kills.

At the poker table, you will invariably go bust. Even Doyle
Brunson, a master Texas Hold’em player, loses games.

Conservative players betting strictly with the probabilities
will also lose. These players will lose less than the rash
gamblers, but in the end, they will also have days where they walk
away empty-handed from an otherwise full table.

It is essential to recognize that probabilities hold no
guarantee of future outcome. A poker player can go all-in with a
full house only to lose to four of a kind.

Similarly, traders can lose billions of dollars on a
once-in-one-hundred-years financial storm. The moral of the story:
If you can’t bounce back from a loss at the poker table, you
aren’t ready for the street.

The traders who still have their jobs after a significant loss
learn to lick their wounds, realize what they did wrong, and double
their effort back into the game.

Only the aggressive and durable poker players can make a
transition to trading stock. It should be noted that the qualities
of character necessary for winning hundred-dollar pots aren’t
enough to earn quick profits from trading.

Perhaps poker should be viewed as an introductory course to a
much broader field in finance. In the time taken to study, stick to
what you know and you can make a killing on the street
tomorrow.

Daniel Osowsky is president of the Undergraduate Investment
Society. Look for the organization’s columns every other
week.