Warren Buffett’s 3 Rules For Profitable Poker Playing

Over the past couple of weeks, we’ve reflected on what some of the world’s greatest financial investors can teach us about becoming better poker players, starting with the legendary hedge-fund manager Jim Simons and Warren Buffet’s recently passed business partner Charlie Munger.

Today we complete the series by turning our attention to The Oracle Of Omaha himself, Mr. Warren Buffet, and looking at three pieces of wisdom that will help us increase our poker bottom line.

1. “The three most important words in investing are ‘margin of safety.”

Margin of Safety (MOS) is the difference between a stock’s true value and current market price. What Buffett was saying with this quote is that investors should be looking to buy stocks where their money has an edge.

In applying this to poker, it’s important to play in games and limits that provide you with your own Margin Of Safety, meaning that your edge over your competition is significant. Of course, there is a fine line there to consider as you don’t want to be wasting your time in the micros if you have the skills to play midstakes, but there’s likely quite a bit of benefit to leaving yourself a comfortable MOS by focusing the majority of your efforts on games and stakes where your edge is clear rather than trying to push edges that are razor-thin.

That’s not to say you shouldn’t challenge yourself and work to make your way up the limits, only that you should do so in a way that keeps your bankroll safe. Just as Buffet’s favorite book – The Intelligent Investor – advises to dedicate a small portion of one’s portfolio (“the smaller the better,” as it says) to high-risk investments, so too should poker players dedicate a specific portion of their bankrolls, no more than 10%-20%, to taking shots at higher variance opportunities, while putting the rest to better use where their Margin Of Safety is much greater.

2. “The most important thing to do if you find yourself in a hole is to stop digging.”

Speaking of Margin Of Safety, in poker, just like in investing, it’s absolutely critical to be self-aware and disciplined enough to recognize the difference between persevering and digging mindlessly.

When you’re in the midst of a downswing, be it within a single session or a collection of far more of them, continuing to solider on without taking a break to assess, reflect and perhaps adjust your play is a surefire way to find yourself in a hole much bigger than it should have been.

It’s true that we don’t want to overadjust every time we hit a common patch of variance, but understanding when it’s time to pause and stop digging momentarily can mean all the difference between taking a minor hit and suffering a significant setback.

3. “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”

I don’t know why anyone in their right mind would want to be responsible for nine pregnant women, but Buffett’s cheeky point still stands. Whether your ultimate goal in poker is to make $10,000, play in the nosebleeds, or turn a part-time hobby into a full-fledged career, as Buffett says, some things just take time.

Gaining experience, developing your skills, growing a bankroll without ever putting it in jeopardy – these are all elements of long-term poker success that, like having a baby, are impossible to be rushed.

Instead, it is by focusing on a consistent pace of development, keeping a healthy body and a strong mind, and taking everything as it comes – one day at a time – that both babies and poker greatness are born.