Maria Konnikova, bestselling author and member of PokerStars Team Pro, recently inspired delegates at the Allan Gray Investment Summit 2019, to make better investment decisions by looking at the metaphor of poker.
As with life and investing, poker players are faced with a dynamic and uncertain environment. You have to learn how to separate skill from chance, when to bet, and when to fold. Sometimes you also have to bluff. But, according to Konnikova, what separates the winners from the losers in this uncertain environment, are those that tune out the noise and take control of their own state of mind.
Besides comparing investing with the game of poker, she also notes that investors tend to react way too strongly to once off events. “Often when we think we’re making a decision based on all available data, we’re actually not. We overweight certain data, depending on things like what we believe about the world, and our own perspective. In environments where we can’t observe causal factors, we create them. This influences our investment successes”, she advises.
“If you play enough rounds of poker you learn that the only thing you can really control is yourself. But perhaps the most important lesson is that the hand you’re dealt is less important in determining your future, than how you play it”, she concludes.
Click here to read the news release where Konnikova also cites a study of Daniel Kahneman, a behavioural economist.
