There is more to poker than life.

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In Texas Hold'em poker, a strong hand can be vanquished at the very last minute by an unlikely lucky draw of the final card - the 'river'. When this statistical aberration appears it is known a 'bad beat'. There have been many famous ones.

Sai Wang lost $1.4m in a single hand when he went all-in with a 98% probability of beating Mark Seif. Sai was already celebrating his 98% probability of winning with fist-pumps and kiss-blows to the crowd as he saw the penultimate card turn. Uncharacteristically for a tournament player, Sai viewed 98% as equivalent to 100% at that moment. Poker is an excellent metaphor for life.

Some people are lucky enough to be dealt strong hands at the beginning of the game of life. Born with genes that predispose an increased chance of success: intelligence, energy, cheerful disposition, self-discipline, composure, resiliency, and creativity. Born to parents with the resources, interests, and ability to care. Raised in neighbourhoods where most people are well-off and happy, crime and violence a rarity, school systems staffed by competent and caring teachers who help students to acquire knowledge. Taught to think rationally, critically, and creatively. These people enter an economy in which they are relatively free to pursue any career that suits them and to make a good living. Sometimes nature is even aligned, with temperate weather and few natural disasters—an ace-high straight; aka, the Royal Flush.

Some people are dealt their cards from a cold deck. Lethargy, antipathy, impulsiveness and attention deficits, irritability, and lack of imagination. Parents who fail to support or worse: abuse. Poor neighbourhoods; crime, drug use, and other dangers. Teachers seeking to mitigate violence rather than mediate a discussion—outdated and outmoded curriculum. Narrow-minded, parochial thinking rather than critical, creative thinking encouraged. Meaningful work opportunities basically non-existent; drought ravaged lands, or floods; earthquakes and wars. Superstitions abound. This is being dealt a 2-7 offsuit.

Games are neat; life is messy. But both are played with incomplete information. You can control several aspects leading up to a decision, but ultimately you cannot control the cards you get or the outcome you will ultimately face.

Investing can thus be an antidote to the false confidence bred from an ignorance of the probabilistic nature of the world. From a desire to see black and white, where we should see grey. Such positive and uncompromising assurance and misplaced certainty: to our non-probabilistic minds, a 98% chance (or even a 90% chance) basically translates to 100% - a certainly; a sure thing- even though it really does not. Political pundit and statistical savant Nate Silver gave a 28.6% chance of Donald Trump winning the 2016 election and was lambasted for getting his Hillary-as-winner forecast wrong. But a 28.6% chance of something happening (in this example of Donald Trump beating Hillary) is much more significant than our minds might generally consider.

Playing poker also illuminates the false sense of security in being passive - there is a natural assumption to believe that you cannot get into too much trouble through inaction, particularly when investing - but as the game teaches you, every passive decision leads to a slow and steady loss of chips. Many chips in life have been lost in this way. Hanging back has the illusion of appearing like an easy solution. In truth, it can be the seed of far bigger problems.

There is often much you can do to avoid loss when investing, but the outcome is never entirely up to you - returns demand risk. No-one gets paid for being comfortable - the psychological discomfort is part of the cost of being a successful investor. It is a painful truism that the correctness of a decision cannot be judged from the outcome. A good decision is one that is optimal at the time it is made, on the information available when the future is by definition, unknown.

Irrespective of where Sai Wang started, or what hands he was dealt in life, he made the correct decision to go all-in at that moment. And correct decisions are often unsuccessful; and visa versa. Luck will always play an unavoidable role in life. Not all success is due to hard work, not all failure due to your mistakes, and not all poverty is due to laziness. This is important to keep in mind when judging people, judging investments outcomes, and judging yourself. Some people start with a flush; others: two-pair. No-one really knows what that the flop, the turn, or the river cards will be.
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