posted on Mar, 1 2014 @ 09:49 PM
reply to post by TheLegend
I'm somewhat aware of making a living off of poker, my point however was that it's a high risk game that you have to be really good at. If you go
all in on a 98% hand 20 times over the course of a year you're running a 33.24% chance of ending up with nothing. Part of going in on poker is
always making sure you keep enough of a bankroll in reserve that you can recover from those rare bad hands because they can and do happen. Gambling
and investing are similar in a lot of ways, and one way is that you never put all your eggs in one basket. In investing that's diversification and
in gambling that's keeping a bankroll in reserve, because if you don't have that bankroll you can't smooth out variance.
So we're back to my initial statement, going all in on a 98% hand is considerably worse than investing in junk bonds which are among the worst
investments. That's not to say you can't make money on it, plenty of people do, but plenty more lose everything because they did everything right
but got unlucky... it's important to keep perspective on just how viable it is. This is true of every 0 sum game.
If you're 90% to win a game, you're 1/10000 to lose all 4. This is where my ignorance comes in as I don't know how long the average poker hand
lasts but if it's 1 minute per and you're 90% 1 in 5 games (I know that's high), that's a situation that occurs once a month (if you're playing
for a few hours every day) so not terribly uncommon.
Because I deal with percentages day in and day out... and have had to explain such things to people many times over the years I can say fairly
conclusively that the vast majority of people are bad at evaluating percentages, 0-5% often translates to 0% while 95-99% often translates to 100%.
Something like 80% translates into rarely losing rather than losing all the time, and so on. My personal favorite is the evaluation of 99.99% per
repetition over say 50,000 repetitions. Most people can not properly evaluate that that's less than 1%.