Poker
“A lot of chess players can’t handle poker. In chess, if you play the right moves, you win. But life is more like poker than chess, in that there are unforeseen and unknown things in life you can’t cater for.” —Demis Hassabis
“Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much–loved hand.” —Charlie Munger
All three major U.S. stock indices rose more than 1% during the week to close out a month of solid gains. For November, the Dow rose 7.5%, the S&P 500 was up 5.7%, and the Nasdaq climbed 6.2%.
Like the quotes about life and poker above, investing also—at least much of the time—resembles poker more than chess.
One can invest in good companies at good prices, be correct, and sometimes not get rewarded.
One can invest in companies trading at significant discounts to asset value and, years later, still hold those same companies trading at the same significant discounts to asset value.
Like in poker, the other people at the table can determine whether you win or lose. Those other people might be other investors realizing the value you see (or not realizing it). Or they might be management executing well and unlocking the value you see (or failing to unlock it, or worse).
But the key, in both investing and life, is to play the hand the best you can, adjust when the odds change, and try to stay around long enough to have a chance to win.
“You’ve got to know when to hold ‘em. Know when to fold ‘em. Know when to walk away. And know when to run.” —Kenny Rogers
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