In this crisp video, poker champion Liv Boeree, tells us that there are three mistakes which poker players make which are also made by many of us in day-to-day life:
a) Misunderstanding the role of luck: if due to a slice of good fortune, you win big but then misinterpret that victory as being underpinned by your skill then you are likely to not just become more complacent/lazy going forward but also take more risk (since you are convinced that you are very skilful). This combination is likely to result in your career graph sliding. Our egos love to downplay the luck factor and that often costs us a lot of money.
b) Quantification is essential: poker is a game of probabilities and you have to train yourself to think in numbers. Numbers bring precision into our thinking. Numbers allow us to communicate precisely with other people (as opposed to using words like “probably” and “maybe” which are open to subjective interpretation).
c) Intuition is not going to get you very far: The people we are competing against are not going to use intuition to beat us. They will use careful, precise research and quantification to us. Intuition is only useful when we do the same thing thousands of time and hence the probabilities and risk-reward payoffs become second nature to us. Most investment-related activities do not fall into this domain.
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