Odds And Investing
As with many of the comparisons between Texas Hold’em and investing, playing Texas Hold’em teaches the basic principle and it can then be applied more broadly to the wider possibilities in the world of investing.
With regards to odds, the difference is that in Texas Hold’em it is very easy to calculate the odds since there is a finite and well defined number of outcomes i.e. “outs” to the hand that you hold. In investing the number of outcomes (or “outs”) and their associated probabilities for a particular investing choice are not as clear or easy to calculate.
Based on your investment strategy and chosen securities for investment you must define the “outs” relevant to each investment situation i.e. occurrences that will improve the value of the security that you are holding. When you have determined what your “outs” are for the investment you then need to work out the probabilities associated with these “outs” and what expected level of increase in security value they will cause.
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