You Gotta’ Know When To Hold ‘em
“Guarding Your Wealth” is a nationally syndicated weekly personal finance column written by Jeffrey D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group, a private wealth management firm that employs sophisticated proprietary strategies designed to protect and grow its clients' investments. Please visit our website, www.guardingyourwealth.com to read past articles in our archive.
(PRWEB) June 8, 2005 -- Texas Hold’em poker has become a craze. Thousands of
players compete in tournaments with the winner receiving a million dollars or
more. Just like in the stock market, though, it’s the professional players that
win the game and profit from the inexperience of the amateurs. Investors can
learn much from these professional card sharks.
I admit to having
pre-conceived notions about poker and gambling in general. I assumed that
winning was just a matter of luck and chance. It seemed to me that gamblers
played the game fast and loose, making decisions by the seat of their pants.
Many investors have the same pre-conceived notions about the stock market.
Yet, professional poker players don’t rely on luck to win. Quite the
opposite. Poker is all about probabilities and they’ve spent countless hours
learning and memorizing them. Armed with that knowledge, they estimate what
cards are held by another player, what cards are needed to win the hand and,
based on the cards they currently have, their probability of winning.
Professional investors do the same thing. A professional investor looks for
opportunities where the odds are in his/her favor.
Great poker players
are students of the game. They know the rules inside and out, and how to use
those rules to their advantage. Likewise, successful investors need to have a
basic understanding of how the markets work, what causes stocks to go up and
down and the various strategies that can be used to find opportunities for
profit.
Poker is a psychological game. The professionals have trained
themselves to keep their emotions in check. They go to great lengths to keep
their opponent from knowing the quality of their hand. They wear hats, jackets
or sunglasses to hide these ‘tells’. At the same time, they want to put
psychological pressure on their opponent in hopes of getting them to make a
mistake.
Investing is also a psychological game. You can’t trust your
emotional reactions. You can’t make decisions based on fear or greed. Both will
end up causing you to lose money and leave the game defeated.
Poker
players know it’s a numbers game. In each hand they play, they calculate their
odds of winning and only proceed when the odds are in their favor. They don’t
expect to win every hand. They train themselves to not let a loss of one hand
affect how they play the next hand. They’re willing to endure short-term losses
so they can win the tournament in the long run.
Successful investing is a
numbers game, too. Professionals don’t overreact every time the market has a few
bad days and they lose money, nor do they get overconfident when they have some
great days and make money. They do their research and put their money where they
know the odds are in their favor. They don’t blindly chase the latest fad or hot
tip. They don’t invest based on gut feelings.
Successful investors
manage their investments. They don’t just ‘let’em ride’. Great poker players
know when to cut their losses. They don’t get suckered into throwing good money
after bad. As the hand progresses and the subsequent cards aren’t in their
favor, they’ll quickly fold, even if they have thousands of dollars in the pot.
Successful investors do the same.
Successful investors also know to lock
in their profits. When they see an investment increase in value significantly,
they take some money off the table. They don’t ride an investment up just to
ride it all the way back down again. They take action to minimize their loss on
the one hand, and then take action to lock in their profit on the other.
If you don’t have the time or desire to learn the investing game then
consider letting a professional manage your money. Don’t think, though, that
just because someone is a broker, has a fancy office or lots of clients that
they are a successful investor. Many times they’re just a successful
salesperson!
When you know the rules and play the odds, stock market
investments can be a great way to grow your wealth. When you don’t know what
you’re doing, though, it can be more like a roll of the dice.
Have a
financial question? I’ll personally answer it. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’.
In
addition to being a nationally syndicated columnist and Certified Financial
Planning Practitioner, Mr. Voudrie provides personal, private money management
services to clients nationwide.
Looking for an energetic expert who is
passionate about financial and wealth management? Mr. Voudrie is an excellent
speaker who will excite and inspire your audience. Mr. Voudrie is available for
a limited number of speaking engagements, television appearances and radio talk
shows. For booking information, email e-mail protected from spam
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Related Articles can be found at www.guardingyourwealth.com under the Guarding Your Wealth
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Source : http://www.prweb.com/releases/2005/6/prweb248428.htm