So i had this weekend a small game of poker with friends. If you are wondering, i lost 75% of the initial money , so yeah, i’m not the best poker player. But during the multiple rounds when i folded, i reflected again on the similarities between life, business and poker.
I have already written an article in 2019 about wealth and poker: Wealth Growth is like a Poker Game
This time, i mainly focused on how my chances have been limited due to the inability to see the flop in many rounds. The flop, or the 3 cards that are revealed after the first initial betting, is what mostly determine if you have a good hand or not.
When you are low on chips, and the other players are putting high initial bets, it is not a smart choice to call, just to see the flop. You will have to choose your battles. When you have a lot of chips, you can allow yourself to call the bet, in order to see the flop.
To summarise it, if you have a lot of chips you can have higher chance to win a hand, because you would follow up on each opportunity. If you have few chips, you can not follow up on each opportunity, because you will have to fold if you do not believe you can win, and that decision, you take it even before knowing if you have a real chance.
From the article i mentioned above, i would like to quote:
1- Wealth growth require taking risks:
Your chips will not grow if you fold every round, you will have to take risks to win.
Wealth wise, investments are a requirement for wealth growth (with very few types of exceptions).
Entrepreneurship requires taking risks, Investments requires taking risks.
That’s why even the very rich, invest in investment companies and funds to take risks on their behalf.
2- The more money you have the more you can take risks:
The more chips you have on the table, the more you can call the bets, to continue playing a hand, and chase your luck. If you only have few chips, you can not afford to join every hand played.
Same applies for wealth, the poor stay poor mainly because they can not afford to take risks. While the rich get richer because they can afford to take many risks, even if many of them fail.