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7 Things Investors Can Learn from Blackjack

Apr 16, 2014

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The analogy of blackjack being similar to investment banking is not a new one, however it has its merits; so what can investors learn from blackjack players and gambling?

The comparison has been made before; you’ve no doubt heard it. The fact that it remains so prevalent suggests that there is some authenticity to the claim, and that there are similarities that can be drawn between the two money-making schemes.

In one, you attempt to increase the return of money you’ve decided to invest in a card hand against the table dealer; this is a move that that requires intellect, skill, foresight, casino strategy and patience in order to be successful.

In the other, you invest allotted money in a service, product, or company that you think is going to give you a higher return after a set period of time. The requirements to be a successful investor are exactly the same as those shown in a competent gambler; intellectual capabilities, planning, endurance and the ability to make strategic decisions are all necessary here too.

As a result of these similarities, lessons can be learnt from either side that may influence the way that they go about the activity in future.

Here are 7 things investors can learn from blackjack, which might just help the new kid on the block earn his investment stripes.

The Fundamental Rule: Don’t Gamble

Winning at blackjack consistently requires much more thought than the average gambler would expect; unlike other casino games, blackjack players need to rely on careful consideration and more than just luck to walk away with more money.

Although it takes places in the casino, the gamblers haven, playing blackjack properly isn’t even actually gambling; it’s investing. Investments require the individual to take a calculated risk, with a warranted mathematical expectation of return; this is true for both blackjack players and financial investors.

This may sound like an extremely obvious point, but the first lesson and fundamental rule which can be learnt from blackjack is to always invest the money, never gamble it.

To be a successful investor, you need to base all of your decisions on statistics and probabilities; essentially it’s an entirely mathematical process. Never allow hunches, gut-feelings or hopes to influence your choices; that’s just gambling, plain and simple.

Equip Yourself

When treating blackjack legitimately as a business and relying on the game as your method of income, you need to learn blackjack strategy at the very least. If you hope to make serious cash, teaching yourself how to count cards is ultimately what you should be doing.

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Doing so will provide you with the knowledge and usable tools to understand what’s going on, when to hit, when to stand and when to strike and start betting big.

The same goes for investing. Learn the markets, learn how to analyze information and how to use statistics as an aid in planning or making your next deal; the bottom line here is to equip yourself appropriately before you get involved and make poor decisions.

Recognize the Right Move

One of the biggest mistakes gamblers can make is, not knowing when to leave the table. Typically, gamblers will stay if they are on a ‘streak’ or having the table is ‘hot’. This is foolish; a good blackjack player knows that the result of the last hand they played has no bearing on the next blackjack cards dealt.

Likewise, if gamblers are having a poor run of play they will convince themselves that the ‘luck has to change’ and that the smart move is to keep playing, rather than accepting that what they’ve already lost is gone.

Follow professional blackjack player habits and know when to bail out of an investment; it doesn’t matter if everything you’ve touched up until now is turning to gold, or if you’ve poured a large amount of money into something that isn’t giving you any return; read the market and use statistical information to ensure you know when to leave before you hang around and get burnt.

Just like those who study blackjack, if you’re a good investor you’ll know when you have the advantage and if it’s in your favor to continue or bail.

Furthermore also recognize that if you have performed badly in several of your last stock deals, there is no mathematical bearing on your next deal also failing; each deal is unique, so treat it so; don’t let yourself be fooled into thinking you’re unlucky.

Long-Term Planning and Team-Playing

Good players are not only concerned with knowing if they are winning at that moment, but if they will continue to make money in the long run; investors need to recognize this and plan for the long term too.

Short term gains are attractive, but proper investments will continue to be profitable over longer periods of time.

Investing in the right people is also important; many of those who have banked large hauls from playing blackjack operated within teams and relied on other players working together. Financial investors should recruit the right people to analyze stock information and advise them on their next move; they’re the bankroll and the researchers are the equivalent of the small players scoping out the right table to hit.

Finally, the last thing to be learnt is from playing multiple hands. Some casinos will allow patrons to play multiple hands of blackjack at a time; usually this is a tactic to exploit the poor strategy-unaware and often intoxicated souls at the table.

However, giving an experienced player that knows when it’s in their advantage to play at that moment the same opportunity can result in the casino losing big.

Obviously, the point here is to always try and have multiple investments on the go at the same time if possible, if several deals are advantageous to you then invest the same amount of money you would in one into all of them; spreading your bets in a sense.

The deeper your knowledge and understanding of the current markets and vales of certain things is as ultimately important to an investor as strategy and counting ability are to a blackjack player, so always strive to increase this.

If you’re an investor, try out these blackjack tips next time you’re trying to make some money. Remember, don’t gamble.

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