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 Holdem 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, its 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 dont rely on luck to win. Quite the opposite. Poker is all about probabilities and theyve 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 cant trust your emotional reactions. You cant make decisions based on fear or greed. Both will end up causing you to lose money and leave the game defeated.

Poker players know its 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 dont expect to win every hand. They train themselves to not let a loss of one hand affect how they play the next hand. Theyre willing to endure short-term losses so they can win the tournament in the long run.

Successful investing is a numbers game, too. Professionals dont 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 dont blindly chase the latest fad or hot tip. They dont invest based on gut feelings.

Successful investors manage their investments. They dont just ‘letem ride. Great poker players know when to cut their losses. They dont get suckered into throwing good money after bad. As the hand progresses and the subsequent cards arent in their favor, theyll 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 dont 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 dont have the time or desire to learn the investing game then consider letting a professional manage your money. Dont 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 theyre 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 dont know what youre doing, though, it can be more like a roll of the dice.

Have a financial question? Ill 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 jeff@guardingyourwealth.com.

Related Articles can be found at www.guardingyourwealth.com under the Guarding Your Wealth Article Archive.

# # #