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Old 07-12-2005, 04:04 PM
DWarrior DWarrior is offline
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Join Date: Mar 2005
Posts: 85
Default Stock Market as a game of Poker?

I've heard this reference before, and I came to the same conclusion after I played poker for a year (I had some very limited experience with stock market, almost none).

After finishing One Up on Wall Street, I reflected on this a bit. Both Warren Buffett and Peter Lynch referr to the Stock Market as a very complex game of Poker, and from Lynch's description of portfolio management, it seems like each stock is a hand of poker that lasts year.

My question is, if it takes about 4 years to really see the "hand" unfold, if I start trading now, I'll really only begin to see how good I am today 4 years from now and be able to reflect. This assumes I have a good amount to start with, which I don't. More likely, I'll only have enough by the time I'm 25 at best (5 years from now), and that's probably stretching it. This means only at 30 will I really begin to reflect on my "game".

I suppose this is neutralized somewhat by the fact that the market is stacked in our favor. Unlike in poker (in which the average player loses, due to the rake), the average person makes money on the stock market (though probably not the median person), so "being good" really means making more than the market average, and just making that is pretty good in itself.

So, before I dive into this game, is there anything I can do besides read literature? I have at least 5 years, and I'm not going to bother trading on stupid sums like $1000, because the commissions will constitute crazy % of my capital. Would it be a good idea to set up a virtual portfolio after having read the books and pick stocks to practice the strategies?

I really don't think the stock competitions that last for a month are a good way to learn, because they're really just gambling, and there aren't any competitions that I know of that last 5 years.
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