Projecting Weakness vs. Allowing Strength

Whether it’s pocket aces or flopping the nuts, one of the skills that’s important to develop as a poker player is what to do when you have a monster hand. The primary calculation here is how to extract the most chips. (Depending on the situation, you also need to be mindful of getting blind-sided. Just how stone-cold are your nuts? If the worst-hand in poker is the second-best hand, it’s especially cruel when the second-best hand used to be the best hand possible.)   

That said, there’s still a ton of nuance involved just by focusing on extracting the most chips possible. The check-raise seems most natural, but projecting this much strength will also end up scaring off a lot of would-be bettors. Many pros will bet-out in the hopes of disguising their true strength, while also growing the size of the pot. If the opponent folds, you can legitimately question how many chips they were ever going to put in the pot anyway. The check-call also has the advantage of ensuring you keep the opponent on the hook for at least another betting round. Your opponent may perceive weakness on your part and potentially increase the strength of their own hand inducing them to bet on subsequent betting rounds.  

The board also plays a role in the relative wisdom of each type of decision. If you’re holding a pair and you flop the top set, for example, it’s essential that you look at the rest of the board. If there are straight and flush draws already on the board, I’m more likely to bet-out. If there are limited or no flush and straight draws on the board, I’m more likely to check and see if my opponent will make a bet. Even still, the advantage of any particular strategy is muted by becoming too predictable in your play overall.  

So, how does this principle apply to other areas of life? Well, let’s say you’re dealing with office politics and that always touchy subject of taking and getting credit for your work. You want to make sure you get your due credit, while also seeming like a team player, right? This is why I like to consider the relative ease or difficulty in someone taking credit for my work. Simply put, if I know it would be extremely hard or risky for someone to take credit for my work, I’m more likely to get my head down and wait for someone to notice with the intent of getting extra points for my discretion. Conversely, I’ll be more on the lookout for opportunities to mention my work when I think there’s a danger of someone butting in.  

 

What Poker Teaches Us about Luck

No doubt, there are dozens of different ways I could talk about the intersection between poker and luck. But one of the things that’s always resonated for me, and continues to resonate, is how often bad luck first appears to be good luck, and vice versa:  

 

“When the gods wish to punish us, they answer our prayers.”

“The worst hand in poker is always the second-best hand.”

“You’re never as high or as low as you think.”

 

You hit the flush on the river only to have your opponent hit a full house at the same time. You can say that you should be able to make a great laydown, but come on. Sometimes, it is pure luck, and it’s a roller coaster ride. You get all your money in with a pair of Ks, only to go up against As. You spike yours on the flop, they spike theirs on the turn, and it all ends up as a split pot with Broadway coming on the river.  

So, it is in life. Part of you has to be ready to accept the good fortune and endure the bad fortune, but another part of you has to be ready to question whether the good luck is really good and whether the bad luck is really bad. Sliding Doors is an underrated movie, by the way.  

 

Picking Your Spots: At the Poker Table and in the Stock Market

Everybody runs hot and cold at different times, that’s just randomness and noise doing its thing. But the key is knowing that by consistently making good decisions, starting with picking your spots at the poker table, you can increase your advantage over your opponent so that, given a large enough sample size, you’re showing a 55/45, 60/40, or 70/30 edge. But, of course, this advantage also has to be calibrated for the stakes. Which is just to say that you’re probably making more money with a 60/40 edge at a serious poker room or casino setting than a 70/30 edge at your typical home game.

 

More to the point is that every little bit, every little edge counts and accumulates over time, even as you go through what feels like unbelievable streaks of getting rivered and blindsided by quixotic play. Similarly, good stock buying tips will still be susceptible to losers, but the point is with the right investment knowledge, you can increase your overall edge and show returns that are likely to beat the market over time.

 

Likewise, you need to ensure you play enough hands to more reliably show this edge. This is a big reason why people talk about having a diversified portfolio. By playing hands or choosing stocks in several different industries, you can decrease the volatility in your results, and investing in the stock market becomes closer and closer to smart strategy and less and less like playing “stock market bingo” with your financial welfare.

 

Of course, in many settings, including investment solutions and market access, the house also takes their cut. Thus, while you need to diversify your portfolio, younger and smaller investors must also guard against buying stocks in such small quantities and from investment platforms with trading fees that can overwhelm any edge that might be gained by creating a portfolio of individual stocks.