THE ART OF THE GAME

By Applying Poker Strategies To Investing, Investors Can Learn To Maximize Investment Gains

Annie Duke, a well-known decision-making expert and professional poker player, has honed her skills in probabilistic thinking, risk management, and emotional control for over two decades. In her best-selling book “Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts,” she shares 18 strategies and tools that can be applied to make informed decisions in investing and the stock market.

• Acknowledge Uncertainty: Investors should acknowledge the inherent uncertainty in the investing process, despite the amount of research conducted. Unexpected events can always occur, and relying too heavily on any one particular piece of information can be detrimental. It is essential to embrace uncertainty and make investment decisions based on probabilities.

• Embrace The Probabilities: In investing, probabilities play a critical role. When evaluating a stock, investors should consider the likelihood of the company’s earnings growth and the market’s positive response to its news. By thinking in terms of probabilities, investors can make more informed decisions and avoid relying solely on gut instincts.

• Avoid Binary Thinking: Binary thinking occurs when investors think in terms of absolute outcomes, such as whether a stock will go up or down. However, the future is uncertain, and the most likely outcome is rarely a 100% certainty. Investors should instead think in probabilities and adjust their investment strategy accordingly. This approach can help investors avoid making overly simplistic investment decisions that fail to take into account the complex reality of the investing world.