Éste es mi blog.

in-vest.-verb (used without object)1. to put money to use, by purchasing or expenditure, in something offering potential profitable returns, as interest, income, or appreciating in value.

So I want to talk about investing today, which should be pretty familar/important for poker players. Right off the bat I want to say there's only a thin line between gambling and investing. In my opinion, it just comes down to how you approach wagering money on uncertain outcomes. If you are making +EV decisions with proper bankroll management, and concentrating on long-term results, I think you are investing. If not, then you are gambling. In this sense, you could say there are poker players that invest, and stockbrokers that gamble, and vice versa.

I don't really like gambling. I mean sure, I have flipped monies in poker before and have bet on sports, but never for an amount that doesn't really affect my finances or future earning power. In fact, the only times I have gambled considerable money (for what my bankroll was at the time) is when I have been on tilt. Tilt makes me gamble instead of invest. It's very similar with securities (stocks and such). Most people have heard investing in stocks without proper knowledge, with money you can't afford to lose, and focusing on short-term results isn't a good idea, but people still do it. Even smart people. Everyone knows "buy low, sell high" is better than "buy high, sell low", but when stocks plunge and people see their money going down most of them tilt and sell their stocks. Then when stocks are overpriced, people tilt (in a different way) again and buy them back.

Being a poker player, you should know the solutions to tilt already. Not saying I don't tilt or that you don't either, but we know in theory what we should do. Focus on the long-term, have a generous bankroll, and just focus on making +EV decisions all the time. In the stock market, the same idea applies. The long-term tends to be much longer though, probably throughout your lifetime. It's never too late to start investing, but if you're in your early 20s, you should start investing now. The sooner the better. Remember, interest works (compounds) every day, 365 days a year.

After spending tons of hours reading on why, how and where to invest, I have been more than convinced that the simplest and probably most effective way to invest is by buying shares in broad-based indexes.  The beauty to this solution is in its simplicity. Broad-based indexes basically reflect the movement of the market. There is no stock picking, which from what I've read in reality takes a ton of time. Some people will say one hour a week of study is enough but I think if you actually try doing it, you'll be spending much more time than that, since you should in that case always be looking for another better company than yours. You also not only have to know about your company, but its competitors, its industry and related industries, etc. The point is hand-picking stocks is hard. To do it successfully in the long-term (again, think many many years) is something I would not want to do. I just have other stuff to think about. Like poker. 

Equally important, broad-based indexes are low-cost compared to other investments like managed funds or going through your broker. That means more monies for you. There difference in a 1% expense ratio is huge after many years, and it can eat up about 1/3 or your winnings after 40 years. One third.

So, invest in broad-based indexes. Secondly, invest regularly. There's a difference between investing $10,000 and letting it run and investing $100 dollars every month for 100 months. For example, $100 invested in stocks every month from January 1929 to December 1943 would've had an annual return of about 5.8% and would be nearing the $30k mark. In reality, the stock market went through the Great Depression during this time and had an effective annual return of -0.065%. The difference is huge obviously, and its due to the fact that when the market is low (underpriced), you buy more shares with $100, and when it's high (overpriced) you buy less shares. This process is called "dollar-cost averaging" and it's good for you.

That's basically the plan. Depending on your age and a lot of other personal factors, you should also invest in bond indexes, and perhaps in foreign indexes. All this helps you diversify. Fact is some years bonds do well, some years stocks do well, and some years emerging markets do well. If you don't know which, it makes sense for you to have money in various investments. Also, look for ways you can avoid paying more taxes. If you live in the US this'd be your 401ks, IRAs and such. Bad tax management can really cripple your investments. So, think about your situation. Do some research.  Come up with a solid plan and stick to it. Do not tilt. If you tend to tilt in poker, it might be especially beneficial for you to auto-pilot your way in your other investments and your future version will thank you for setting him up with a better chance to reach financial freedom.

Anyway, I hope you ballers out there get motivated. As you saw, you don't need huge amounts of money to start investing. Investing $100 or $250 a month goes a long way even in sour markets. I've seen some IRAs and such that only need less than 1k to get you started. Obviously don't take money out of your bankroll that you need to play your stakes or to move up and win more monies. But if you do have some extra cash lying around or don't need this month's winnings as much then do some research and start investing.

Good luck!

Disclaimer: I'm not a financial planner and you should do plenty research before mapping out your plan. I am basically sharing mine. So, invest some time to get your read on. Also, this plan should work unless the global economy fails, which is I guess possible.

Interesting reads:

Fooled by Randomness by Nassim Nicholas Taleb. You can't even guess how much up/down you will end a session, imagine timing a delicate globally influenced market. How many full-time stock professionals timed the latest stock crash? Also see A Random Walk Down Wall Street by Burton G. Malkiel and Irrational Exuberance by Robert J. Shiller.

The Little Book of Common Sense Investing. Jack Bogle, creator of the first broad-based index fund. Easy to read, very solid information about the strategy I laid out in this blog post. Also see The Bogleheads' Guide to Investing. Simple, easy auto-pilot, great if you want to invest but be focusing on other stuff.

The Intelligent Investor by Benjamin Graham. If you're keen on stock-picking this will show you how tough it might be. Interesting read, but quite long and some consider it to be outdated. I've also heard Stocks for the Long Run by Jeremy J. Siegel is supposedly good, but I've made up my mind I don't want to be researching stocks so I won't read it.

TheBryce's blog on CR. Do not leverage yourself and put money into stuff you don't know as much about (aka gamble). Also see his videos solid logical-based HU crushing (aka investing).