Thoughts on investing: A look into similarities in the stock martket and on the felt

Whether making investments in the stock market or at the poker table, it is essential to have a reliable set of rules or a system that has been tested in real time, you should follow these rules in order to preserve capital and cut losses. The investor must also consider the odds of their stock making a gain or a loss. Price objectives and targets should be a large part of every investors system. With proper money management and calculated expectancy, you should aim to trade only in situations where the odds are in your favor. Another major component that works its way into investing is psychology and/or human emotion. Stocks are made up of human character traits, similar to the type of people that own them. Some stocks are risky and volatile while other stocks are conservative and predictable. The market repeats cycles and specific chart patterns because humans repeat their actions and character tendencies.

The same is true in investing; I can cut a loss short and wait for the next opportunity without risking the farm if a realizable loss is recognized. If the cards are good and my probabilities of winning the hand are high, I can call the bet or raise the bet. The connection I am trying to make with investing in the stock market and playing poker relates directly to cutting losses short (capital preservation and money management) and my odds of winning the game (in the stock market this could be called expectancy).The no-limit aspect allows your upside potential to be unlimited which carries through to investing. If you cut losses short and ride your winner, the up-side potential in investing can also be unlimited. In the real world of investing in the stock market, you should always invest in the most optimal situations and ideas. The ensuing gain or loss will prove or disprove your prior theory. Again the most important component of both ventures is cutting losses short and moving on without becoming emotionally involved.

All investors and poker players bring emotions to the table, some control them better than others. The bottom line is to understand your surroundings. Implement an optimal strategy that maximizes your success & minimizes your risk. Tomorrow is a new day and there will always be an opportunity, because they are always around the corner. 2010 is a new year and I wish you much success in all of you future investing endeavors.