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  • Glenview Capital's 7th Annual Casino Night [View instapost]
    Good luck!
    Apr 5, 2013. 05:58 AM | Likes Like |Link to Comment
  • Texas Hold 'Em Tournaments And Value Investing [View article]
    Oh, and I too am long on AUTO...;)
    Apr 4, 2013. 05:45 AM | Likes Like |Link to Comment
  • Texas Hold 'Em Tournaments And Value Investing [View article]
    Chris, thank you, this is really great stuff :). As a long term value investor who built an investing bankroll playing poker, I thoroughly enjoyed reading through this.

    At the end of the day, unlike chess, poker and the stock markets are a “game” of incomplete information. As human beings, the best we can do is to gather, analyze and apply the information we have at hand. By “apply”, I of course mean calculating the EV of a “bet”, given the information we have.

    "If you think the math isn't important, you don't know the right math." I believe I have read (so many times that all the page corners seem folded and lines highlighted in different colors everywhere :D) 25+ books on poker and I can assure anyone that you cannot be a long-term winner without the right math. That said however, you cannot be a long-term winner solely with the right math. You need constant day in and day out discipline. Otherwise, 1 second of weakness “I’ll call his all-in, I can feel he’s bluffing” or “this stock just feels right, I’ll buy it” will cost you days, weeks or months of hard work. Every player and investor needs to understand his profit margin is very slim. You simply cannot be losing money by lack of discipline. The only way to consistently make money in the long run is to get in with + EV and stay cool when – EV. While it is very hard to maintain discipline at a poker table, there is no excuse for the value investor. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Warren Buffet. Your due diligence should be done in advance. When those quarterly results are released, you should already know what your play will be – No time for second guesses here. A great poker player will already know on the flop what his play will be on the river.

    Your point on “Liquidity constrained counterparties” is an interesting and valid one. However, it is noteworthy that stack sizes in poker will greatly enable (or limit) you to vary the EV of your bet/call and if extremely short stacked, may limit your option to just 1, ie. call/go all in. The extent of the impact in poker is much greater than in value investing in the stock markets. Ultimately, you are relatively far worse off to be in a tournament with a small stack than having $10,000 to invest versus $10M. So all is not so bad for the small investor :). And it gets better.

    While it is indisputable that very large investors have the aforementioned specific advantages, it is in my opinion easier to obtain higher returns on investments for small investors as they can freely play in the microcap field, land of the relatively illiquid high risk/high potential investment. Out of bounds territory for the large equity funds and institutions and my personal hunting ground all season long.

    “I always want relatively larger, influential stakes in the companies in which we invest.” I could not agree more, but this is only accessible to the small investor by joining a well-managed fund.

    To your Tells, Math, Scale and People sections, I would like to add Psychology. Many have written about the psychology of a poker player. Many have written about the psychology of an investor. However, where I find things get really interesting is that while in poker you will essentially be focusing on 1 player (except nearing the end/bubble of poker tournament) at a time, in the stock market you will need to analyze the psychology of the “market”, ie. the investors. The only individual you will sometimes need to “read” will be the market maker playing games with your head ;). Being able to go against the crowd Warren Buffet style is essential and cannot be overstated. As for me at the poker table, you better not be sitting with me on the bubble if I have an above average stack. I will be betting into every pot until someone sticks their head out. And even so, next hand I will come straight out all guns blazing until someone with a large stack plays back at me. The old adage to play tight at a loose table and loose at a tight table still holds:

    “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” Warren Buffet… again
    Apr 4, 2013. 05:45 AM | Likes Like |Link to Comment
  • Texas Hold 'Em Tournaments And Value Investing [View article]
    Chris, thank you, this is really great stuff :). As a long term value investor who built an investing bankroll playing poker, I thoroughly enjoyed reading through this.

    At the end of the day, unlike chess, poker and the stock markets are a “game” of incomplete information. As human beings, the best we can do is to gather, analyze and apply the information we have at hand. By “apply”, I of course mean calculating the EV of a “bet”, given the information we have.

    "If you think the math isn't important, you don't know the right math." I believe I have read (so many times that all the page corners seem folded and lines highlighted in different colors everywhere :D) 25+ books on poker and I can assure anyone that you cannot be a long-term winner without the right math. That said however, you cannot be a long-term winner solely with the right math. You need constant day in and day out discipline. Otherwise, 1 second of weakness “I’ll call his all-in, I can feel he’s bluffing” or “this stock just feels right, I’ll buy it” will cost you days, weeks or months of hard work. Every player and investor needs to understand his profit margin is very slim. You simply cannot be losing money by lack of discipline. The only way to consistently make money in the long run is to get in with + EV and stay cool when – EV. While it is very hard to maintain discipline at a poker table, there is no excuse for the value investor. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” Warren Buffet. Your due diligence should be done in advance. When those quarterly results are released, you should already know what your play will be – No time for second guesses here. A great poker player will already know on the flop what his play will be on the river.

    Your point on “Liquidity constrained counterparties” is an interesting and valid one. However, it is noteworthy that stack sizes in poker will greatly enable (or limit) you to vary the EV of your bet/call and if extremely short stacked, may limit your option to just 1, ie. call/go all in. The extent of the impact in poker is much greater than in value investing in the stock markets. Ultimately, you are relatively far worse off to be in a tournament with a small stack than having $10,000 to invest versus $10M. So all is not so bad for the small investor . And it gets better.

    While it is indisputable that very large investors have the aforementioned specific advantages, it is in my opinion easier to obtain higher returns on investments for small investors as they can freely play in the microcap field, land of the relatively illiquid high risk/high potential investment. Out of bounds territory for the large equity funds and institutions and my personal hunting ground all season long.

    “I always want relatively larger, influential stakes in the companies in which we invest.” I could not agree more, but this is only accessible to the small investor by joining a well-managed fund.

    To your Tells, Math, Scale and People sections, I would like to add Psychology. Many have written about the psychology of a poker player. Many have written about the psychology of an investor. However, where I find things get really interesting is that while in poker you will essentially be focusing on 1 player (except nearing the end/bubble of poker tournament) at a time, in the stock market you will need to analyze the psychology of the “market”, ie. the investors. The only individual you will sometimes need to “read” will be the market maker playing games with your head :). Being able to go against the crowd Warren Buffet style is essential and cannot be overstated. As for me at the poker table, you better not be sitting with me on the bubble if I have an above average stack. I will be betting into every pot until someone sticks their head out. And even so, next hand I will come straight out all guns blazing until someone with a large stack plays back at me. The old adage to play tight at a loose table and loose at a tight table still holds:

    “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” Warren Buffet… again ;)
    Apr 4, 2013. 05:44 AM | 2 Likes Like |Link to Comment
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