Karen Wagg's blog yesterday highlighted a book by Aaron Brown, executive director at Morgan Stanley, which claims finance and poker are very similar and investment professionals can learn a lot from good poker players.
So the question I have to ask is why weren’t there any fund managers in the final of Royal London Asset Management’s (RLAM) poker game last night?
The shocking answer to this is four journalists and Karen Wagg herself – marketing communications manager at RLAM – wiped them all out in the initial rounds.
It makes me chuckle a bit when I think of the conversation I was having with a fund manager before the game, who was describing his job to me as taking risks and making decisions on what the market may do and how assets may perform.
If investment really is like poker then it’s slightly concerning fund managers can’t beat someone like myself (sorry, I had to get that in somewhere!), who has no investment experience whatsoever, in a ‘beginners’ game.
Aaron Brown isn’t the only person to claim poker and investment are similar.
A man called Dr Steve Sjuggerud, who was vice president of a $50m global mutual fund and an international hedge fund manager, says: “Investing is a game. Think of it like poker. You’ve got to know how to play the game, but the game isn’t about the cards you’re dealt. The game is about how you manage your money.”
He goes on to say poker isn’t a card game, but is about making smart decisions with your money “100% of the time”.
I may have to draw the conclusion at this point that my poker medal was down to ‘beginner’s luck’, as I’m not even going to pretend I was making smart decisions about money – it’s hard enough to do that when the money belongs to me, let alone someone else.
Another trader in Australia called Troy Schwensen would probably agree with this conclusion, as he says buying junior mining stocks is gambling but then goes on to say he does not mean gambling in the sense of “destitute casino junkies losing the family home in a poker game”.
According to Schwensen there is ‘reckless gambling’ – blowing thousands of pounds on games like poker – and ‘educated gambling’, which is presumably what he and other traders do.
So although he says buying mining stocks is gambling, Schwensen then lists a whole set of factors to take into consideration such as trading liquidity, cash position, project diversity and hedging commitments.
At this point, I have to admit investors need to have a lot more technical knowledge than poker players do, but perhaps have slightly less fun in the process.
As a final note, any fund managers who were closely watching the game, please don’t take Aaron Brown’s comments about investors learning a lot from good poker players too literally – I don’t want to be held responsible for any mishaps!
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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