Can You Build An Investment Strategy Like A Game Of Poker?
There are life lessons hidden everywhere around you if you care enough to look. So it might seem odd to consider a game of poker when it comes to investment lessons. However, poker is a lot more than a gambling card game. You may not know all the outcomes for sure. You might have a rough idea of what is more likely to happen, but an investment portfolio can also be full of surprises. When you are faced with unexpected situations, the key is knowing how to bounce back. This is precisely what poker is made of.
Lessons learned from a game of poker include:
Luck is not everything; you need skills too
Sometimes, you lose, and that's okay
Let informed facts guide your decisions
Collect feedback to reflect and improve
But are those pieces of advice sufficient to be a skillful investor? Let's check it out.
Investment: Balance luck and skills
In an ideal world, you would want luck on your side. But as luck can be volatile, your skills are here to keep you safe and grounded. Does it apply to every investment situation? The answer is yes. You could win the lottery tomorrow and be instantly rich. This is luck. But if you have no investment skills, you'll burn through your gains fast. The link between luck and skills is clear: The more skills you have, the more you can build on your luck. Luck alone won't do in the long term.
This is the most important lesson, and that can apply to your investment strategy. For instance, if you are interested in commodities trading, you must balance luck and trading know-how. Luck is here as inflation means that your stock value increases. But the real skill is to identify the right time to sell!
Investment: Facing loss
Your investment portfolio needs to be built to face fluctuations and risks. If you focus only on the stock exchange market with similar stock types, you are bound to lose a lot of money when the industry is affected by a crisis. Therefore, the first lesson of a healthy investment portfolio is to account for potential losses and diversify. As the saying goes, you shouldn't put all your eggs in one basket. So acknowledging that you could lose means you can better prepare for it.
Investment: Let the facts decide
Amateur investors are prone to panic and emotional decisions, which can lose them a lot of money. Investment is not a game of luck. It is a strategic process that relies on capturing market and business data. If you are uncertain of how to progress next, we strongly recommend entrusting a financial planner with your portfolio.
Investment: Observe, learn, and grow
You rarely get the opportunity to collect feedback on your investment decisions. But you can observe how the market reacts to identify patterns that can be useful in the future. This is typically best-suited for experienced investors. Newcomers should work with an expert advisor to find out more about the market analysis.
In conclusion, it would seem that the practices you develop in a game of poker can be applied successfully to your investment strategy. However, this doesn't mean that talented poker players are successful investors. They have an advantage as they can keep their head cool under pressure and focus on the facts to plot their next move. Indeed, most investment mistakes occur through panic or misinterpreting information. So, be cool and analytical as a poker player for your investment strategy!