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Ep. 529: Annie Duke #2 with Michael Covel on Trend Following Radio

Annie Duke
Annie Duke

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Annie Duke is on the podcast for the second time. She is a poker player, author, decision making expert, and cognitive scientist. Her understanding of how luck, skill and uncertainty all play a role in life is fascinating.

Donald Trump has made some unusual cabinet choices, especially for getting elected by such a small margin. Annie breaks down her perspective on why Trump chose the way he did. One of the hardest people to play against is someone playing aggressively across the board, such as Trump. She relates Trump’s aggressive political playing to poker, giving insights as to how Trump opposition might be playing their cards to beat him.

Annie moves on to decipher luck and skill in decision making and outcomes. Black and white thinking can be harmful. Decisions that don’t go your way are not always the wrong choice. You may have taken the right direction, the cards just didn’t fall in your favor. You need to be able to move on and know that another chance is around the corner. Fixating on decisions that were wrong can easily start to snowball and make things personal. The key is to learn to move on from one hand dealt to another quickly because life won’t pause for anyone. Take the time to reflect later, but don’t get caught up in the moment and dwell on what mistakes you may, or may not have made.

The world of poker is a male driven sport. Focusing her purpose on winning the game rather than getting people at the table to like her enabled her to get over discrimination and actually use it to her advantage. Not caring about the approval of peers instantly gives the person being discriminated against the upper hand. Once you view something as a challenge rather than adversity you become a stronger person and begin creating a positive narrative for that situation and your life. Shying away from adversity is a way of giving up on yourself and falling victim. Facing adversity as a challenge provides self power and confidence.

In this episode of Trend Following Radio:

  • Quality of outcome vs Quality of your decision
  • Game theory and math
  • Applying poker decision making to life decision making
  • Cognitive science

Mentions & Resources:

Listen to this episode:

The Annie Duke Episode: Poker and Trend Following

There are many correlations between trading and poker. Consider this excerpt from my best selling, Trend Following:

In the book Absolute Returns, Alexander Ineichen stresses that trading is a “game.” He sees no rules for the game except the constant of change, but more importantly, he reminds us that it is crucial to avoid becoming the “game.” There are three types of players in the game:

• Those who know they are in the game.
• Those who don’t know they are in the game.
• Those who don’t know they are in the game and have become the game.

If, within a half of an hour of playing poker (or trading for that matter), you don’t know who the patsy is, you’re the patsy, or as Ineichen calls it “the game.” I have introduced those traders who didn’t know they were in the game and therefore became the game in the big events of the Long Term Capital Management hedge fund implosion, the Barings Bank collapse, and the October 2008 market crash. I introduced those traders and investors who did not know they were in the game pursuing Holy Grails that never panned out. And I introduced trend followers who knew they were in a game and brought an edge to the table every time they played. If you know trading is a game and you want to be a part of it, these are stark choices.

Recently I had Annie Duke on my podcast. She is an author, entrepreneur and professional poker player. We discussed several ways in which the psychology of gambling overlaps with that of trading, investment and other aspects of business. The following is brief feedback from that interview:

Mike, loved, loved, loved the Annie Duke episode. My favorite one yet. GREAT STUFF! [Name]

Thanks! More on gaming and betting? Go.

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