An important lesson on in investing strategy using some interesting parallels with the game of poker.
This investing lesson runs through a few really important topics that can make you think a bit differently about your investing strategy.
Some things that are much more obvious in a game of poker may not be as obvious when you're thinking of your investing decisions, but the parable can be a powerful way to think about it from a different perspective.
If you have a long term investing strategy, this can be a great way to think about some of the things you do differently and challenge some of the established narratives.
I hope you find this investing strategy tutorial useful.
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Hey guys, it's sasha today, i'm going to share something pretty important and i hope quite interesting. This is a lesson about investing strategy that i feel can really change how you think about making investing decisions, and i think you might think about a few things slightly differently when you've heard - and there are a lot of different important points throughout this. This is not just one lesson so so so listen through the whole thing. The lesson is called investing is like poker, but it doesn't matter whether you're a seasoned poker pro or if you've never played the game before.

That is not what this video is about, because poker has many of the same upsides and downsides as investing, and there are some interesting things that you can see really clearly when you're talking about a game of cards that are perhaps not as clear when we make Our investing decisions, poker is a game that has a perfect numbers-based theory and numbers based outcomes with very imperfect and very limited data available to us when we are playing the game. Having a pair of queens is a really great hand when you're starting out each hand, and you have a very large chance of winning the pot. But as you play, you have no idea what any of the other people around the table are holding, and you also do not know what the flop turn or river cards will bring. You also don't know what the psychology is going to be around the table, how people are going to play, etc, because, as you play each hand, new information is constantly revealed to you all the time and that can help you make better decisions than what you can Make just at the beginning, you can see patterns and what the other people are doing, how they're betting you can you have the three cards that will be shown in the middle of the table? That could make things much better or a lot worse for you, depending on what they are, and this is exactly what happens with investing, and you have to take note of these three cards.

If the turn is telling you that your king queen suited has no chance of collecting anything, then your cards don't look as good as before. You saw that extra information and you will have to adjust your strategy. Maybe you have to sell out of an investing position because new information that you've just come across completely changes your perspective, and you have to be open to your perspective. Changing it might tell you that your previous thesis no longer stands.

You might also, on the other side, double down and invest more if the new information on your king, queen suited, brings up a jack and ten of exactly the same suit. And i might tell you that you could possibly be onto a big winner and from the outside. Many people who don't play poker would perhaps say that it is just gambling. It is just a game of chance and if you'd play poker, you would know that to some degree it is true.

Chance does have a big role. Just like the stock market will do whatever it will do whenever it wants to do it, but underneath that the numbers are the difference between pro players who make a lot of money and beginners who lose every friday night in the short term. Psychology can be the reason why you win a hand. You might have read a tell.
You might have sensed that your opponent was nervous or maybe you saw them being indecisive. Maybe you saw something in their eyes. Maybe you heard a nervous tap of their foot under the table or got some other bit of data that other players did not, and you can win a hand just on that psychology. You can win a hand just by having these little snippets that give you the upper hand, but if you want to win a big poker tournament or if you want to win consistently week after week, month after month and year after year, you will need to learn How to play the numbers and you'll need to learn exactly what the probabilities and distributions look like in different scenarios with different cars on the table, and it's the same exact thing with investing.

You can make a short-term trade, because you feel you know something that others. Don't or you see the data differently, you might be able to get a big win as a result, and that could well happen. But in the long term fundamentals rule the game. Investors with a robust long-term strategy have a very good likelihood of making money hell.

Just investing in the total stock market index will an average return nine to ten percent a year, and that is not too shabby. That is actually quite good, but try going for big trades, based on hunches all the time every single day, based on guesswork and see how far that will take you, maybe you're, going to win some, but the vast vast majority of people who do this, who trade Over a long period of time will lose money. You don't have to trust me. You can google, it there's endless studies available and out of the tiny minority that do not out of the tiny minority that managed to turn a profit.

Almost everyone from that tiny segment will make returns that are less than the minimum wage they would have earned if they spend the same amount of time. Flipping burgers down the local shop - and here is the really really important first lesson: poker is a game of hands. At the beginning of each hand, everyone around the table is equal. Now, players might have different numbers of chips and might have different amounts of money.

They can play with and the order around the table changes. So there's slight advantages and slight disadvantages to some of the players, but that's pretty much it then you play a hand and you either decide decide to play or pass and most of the time in poker. When you assess your hand, you will choose to pass because you don't feel it is a good enough investment and if you play you will either win or lose that particular hand. But once that hand is over the next one starts and everything starts from scratch.
Again, you might have slightly more or slightly less chips, but you have to play the exact same game and use the same strategy. Investors often fail to recognize that investing works in the same exact way you go and pick on a company that you want to invest in you've probably looked at dozens of other companies first, but then, after doing your assessment, you decided it wasn't worth putting your chips In and then you're staring at a pair of aces and you decide that now. Finally, it is time to go and invest in this thing, and so you push your chips into the table, so you invest and you play out the hand things happen along the way. Other people are playing against you, new cards show up and they could make your hand better.

They could make it worse over time, but then, after all the ups and downs in the end, let's say you win. The share price reaches your target. You don't see any more upside and you sell up. You have completed that hand.

You now have a few more chips and you can do a bit more with them, but now now you have to start again, but the game hasn't changed. You're, just playing the next hand, the key to winning over time is to consistently play out a winning strategy. One hand after another. Rinse and repeat you don't have to win every single hand and you don't have to win big in the hands that you do win.

But if your strategy lets you win enough of those hands over time, you are going to do pretty well, and the second really important lesson is this: in poker, the vast majority of players are beginners. Quite a few are complete noobs, who barely know the rules. There are some pros out there and you can play with them, but when you play against beginners two things happen. The first is a good bit.

Numbers always win in the long run, and if you stick at it - and you know what you're doing you should win on average over time against these beginners, but playing with complete beginners is also incredibly difficult. In fact, it is much more difficult to play with complete beginners than with seasoned pros. You have no idea what you're going to do. You have no idea what they're thinking or why they're thinking it, they probably don't know themselves.

You can have the most solid poker strategy out there, but you can still lose because it is impossible to predict what it is that you're dealing with where it's going to go. You're, basically playing blind - and this analogy is how i often think about people who go and try to invest in things that are very unpredictable things like meme stocks, meme, crypto tokens, airtight international or whatever penny stock. Someone told you about, and the problem here is that we all think that we can make a lot of money from this, because this is the beginner stuff. This is the stuff that goes up and down.

This is the easy money and if you play these games, you absolutely have no idea what the other side is doing. You also have no way of being able to find out. This is not a large corporation with years of history, robust data and endless information out there from different sources and sure some people will make a lot of money off. These plays playing these beginners, but don't for a second think that you are going to make this money, even if you do, because you are some kind of great investor, the only real reason is going to be luck.
I hate to break it to you, so so make sure that you are happy with your choices. If that's the route that you want to choose and one of my favorite poker formats out, there is a multi-table tournament. These tournaments are where a number of people all compete for the same set of prizes. Everyone pays an entry fee and there might be a few dozen, maybe even a few hundred different people playing on many many different tables, and this takes a while.

But as players are eliminated as the game progresses, eventually, a small number end up on the final table, which is where the big money is won and the reason i really like multi-table poker tournaments is because they add a whole new strategic element to the game. Above and beyond normal poker, you have to plan, and you have to be very calculated with your strategy. The way that you play at the beginning of one of these tournaments is completely, or at least has to be completely different to how you would play on a final table, and it's almost like you're playing two different games. When you consider those two things, the people who do particularly well in these tournaments know that and they apply it.

You'll have someone who doesn't play a single hand for the first hour, or maybe even two of the tournament just sitting there and watching, but then that same player will be the most active player on the final table and as an investor. This lesson of having a long-term strategy where you have to play differently at different points is incredibly important. There will be times where, as an investor, your strategy is just to sit tight. Do nothing wait, wait some more and that is going to happen a lot that should happen for the vast majority of your investing career, i mean sure, put in some extra money every month.

If you have it all of that, but more times than not the right strategy is just to hold and wait, but then something will happen. There will be a moment of panic. The markets will turn red and crash to the floor, or new legislation happens or who knows anything can happen, and then the strategy that you want to play at that point will be, and in many cases should be completely different. Sometimes you will have to turn from the guy who has done nothing for a few years to the most active player, especially if you've decided what your strategy will be in that particular scenario in advance.

Before it happens, you know, while you are sitting there doing nothing. I hope you found this one thought-provoking and useful. If you have, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching.
I really really appreciate it and, as always i'll see you guys later.

By Stock Chat

where the coffee is hot and so is the chat

28 thoughts on “Investing is like poker”
  1. Avataaar/Circle Created with python_avatars Hans Hansli says:

    Hey Sasha, I would like to hear your thoughts on something. Your portfolio, and I would assume this is also true for many of your viewers, is very tech heavy. In case the entire market crashes, it's pretty clear that no one can escape, that you need to hold and maybe buy some more. But I'm wondering, what would you do in case of a massive tech-specific crash. Any ideas for this scenario? Not sure if it's worth a video, but it could be interesting for a lot of people here.

  2. Avataaar/Circle Created with python_avatars ITSNOTU (James Jones) says:

    I see your video and raise a question… Would you compare crypto currency trading to forex?

  3. Avataaar/Circle Created with python_avatars Chris says:

    Talking about poker and a bit slightly off topic, I remember watching the news some time ago and there was concern over the number of day traders reaching out to gambling helplines. There are also some studies which link investing (day trading more so) with gambling.

  4. Avataaar/Circle Created with python_avatars Farman Shah says:

    @Sasha Yanshin what course did you do to have such great knowleadge of the stock market.
    I just want to giver all the stuff you have done

  5. Avataaar/Circle Created with python_avatars ashley anastasia says:

    So you mean that you doesn't recoment hold. Stock long term?,just playing depent the situation?

  6. Avataaar/Circle Created with python_avatars Jobo Vandle says:

    So we should sell our stocks and start playing poker…… thanks for the tip

  7. Avataaar/Circle Created with python_avatars Black Circle says:

    I wish I could be be rain man but for stocks heheh

  8. Avataaar/Circle Created with python_avatars gcauldwell says:

    Very useful comparisons, clarifying explanations of aspects of smart investing. As always, Sasha encourages patence, alertness, hard work, , and defensive allocation of resources, to cultivate our friendship with "luck".

  9. Avataaar/Circle Created with python_avatars Mike From Wales says:

    Yeah pokers a great game ! You need a great memory, but for me ,like investing most important is money management or your chips ! This is were gambling comes in ! Do you dollar 💵 cost average or all in ? And then a little bit of luck can help ! 😜

  10. Avataaar/Circle Created with python_avatars Artem Chuprin says:

    I hope you succeed in the market! May it bring you much reward 😁👍

  11. Avataaar/Circle Created with python_avatars Morley says:

    Hey Sasha, I absolutely love the poker analogy! If you don't mind sharing, I have a question. What have you found to be a good broad-based screen or source to look for companies that show signs of being worth a deep dive to research? What initial criteria do you use? How do you narrow down the field so that you have time to look in detail? There aren't enough years in my life to research every stock available!

  12. Avataaar/Circle Created with python_avatars liarzdice says:

    I had to laugh at the comment of playing against fish because it reminds me of the current market; throw out what you're expecting they'll do because they're so bat-shit-crazy and unpredictable that you have to go back to basics and don't assume any read is correct. In fact some of the best players mix this in to balance range/keep opponents off balance as you sound like you know. 🙂

    In this context it's about time in the market, playing your hand (stocks) correctly and understanding short term outcomes can and will not always follow expected results.

    Patience, not looking at your bankroll as actual money and understanding you can do the right thing for long periods of time and still get fucked are parallels with poker and investing. We as humans aren't conditioned/hardwired to accept good behavior and negative outcome. It's why so few actually beat the market or poker long term.

    Other thing I'd emphasize is how playing (investing) like a fool can engrain bad (and losing) habits that can create costly learning curves.

    Great video by the way, love when other real world examples can mixed in with investing to sharpen ones perspective. Or challenge it, which I particularly enjoy. Like poker, it involves numbers but it's just as much art and predicting the future based on imperfect information.

  13. Avataaar/Circle Created with python_avatars Arcotholus Analcyst says:

    Investing is like 🐎🐴 Horse Racing. Some run on ⚡ electricity, some roll downhill…

  14. Avataaar/Circle Created with python_avatars Jack Tilley says:

    True, i will only invest if a certain amount checks stack up.
    If I have any uncertainty, i'll avoid. therefore even if it drops 50% i'll double down to but pretty much never go all in.
    The best poker players make good investors.

  15. Avataaar/Circle Created with python_avatars Adrian Brunton says:

    So you're supposed to fold most poker hands? Maybe that's where I'm going wrong! I can see a side channel coming – Sasha Yanshin on Poker!

  16. Avataaar/Circle Created with python_avatars DoeschaD says:

    This video nails it. I started investing in summer 2020 (and I play spades lol) l i kept prodding my skeptical poker guru that he would be a good investor becuz of his tournament level skill. One year later he now regrets that he didn't take me seriously at first. After a few months of convincing and showing him results he did end up opening a portfolio. Better late than never

  17. Avataaar/Circle Created with python_avatars Manne says:

    Good bankroll management is important in poker and also in investing. Going all in with a pair of queens will possibly lose you your stack, but is often the optimal play for long-term profitability. Hence, you don't enter a table with more than a few percent of your capital. Same could be said for investments where there is large potential downside. If you've done analysis on a penny stock and it seems promising, invest but not all your cash.

  18. Avataaar/Circle Created with python_avatars Big H797 says:

    Sasha, on the flip side in poker when you lose part of your stack your leverage at the table decreases. Chip leaders can then bully small stacks players into folding when their opponents actually have the winning hand. In the market you can make money when a stock drops by buying the dip. If the fundamentals are sound temporarily drops in the stock price can give you a chance to buy a good investment at a discount. The time horizons are different in poker vs the market. Most poker players including professionals go broke over time. It has to do with the players relationship with money and the emotions in gambling vs investing. I believe there is less adrenaline in investing vs gambling because of a different time horizon. In addition the rake (antes) can cost you everything over time if you are unlucky in drawing cards. I guess if you are buying penny stocks or into buying options the distinctions between gambling and investing become smaller.

  19. Avataaar/Circle Created with python_avatars Jay Burgess says:

    A little off topic, but I gotta ask: is anyone else here invested in Velocys? It fell back a bit today, but Wednesday and Thursday were like nothing I've ever seen before! My holding was almost 30K in profit at one point! (And nope, I didn't sell. I'm superglued onto the rocket and I ain't getting off before it reaches Saturn!)

  20. Avataaar/Circle Created with python_avatars Dario Mestre says:

    Could you do a Video on 2022 new investment opportunities or too soon?

  21. Avataaar/Circle Created with python_avatars essem says:

    Yes, like short stacked, heads up pot limit Omaha atm

  22. Avataaar/Circle Created with python_avatars Eryk Solon says:

    Looking at your linkedin – you must be really good at poker! 😂

  23. Avataaar/Circle Created with python_avatars Danzo G says:

    I'm really good at poker so this is good , knockout poker is fun, as is investing it growth stocks

  24. Avataaar/Circle Created with python_avatars Saure22 says:

    Have you been watching the True Geordie? He has a poker stream and his football stuff is sponsored by freetrade

  25. Avataaar/Circle Created with python_avatars Pacifica 9 says:

    Absolutely agree. Poker beginners play hands on a whim rather than logically. And if they win, that becomes their strategy!

  26. Avataaar/Circle Created with python_avatars Nuromanca says:

    Dude that's the second video you've made today while Tesla dipped: don't work so hard! 😉

  27. Avataaar/Circle Created with python_avatars Hakeem Jackson, CA - Investing says:

    I'm here a few minutes after upload and there's already a dislike by someone who I'm convinced hasn't watched the video 😂

  28. Avataaar/Circle Created with python_avatars bitnukl says:

    Well, the huge difference between poker and stonks is (for the average investor) that you can double down on a winner with no real limit and without the other side running away.
    That’s why I invest and don’t play poker. 😉

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