What This Pool Playing Poker Shark Taught Me About Stock Trading

Last Friday, I talked about the 1980’s Tom Cruise/Paul Newman movie The Color of Money and the book. The movie was a sequel to the 1961 classic movie The Hustler, starring Jackie Gleason and Newman.

There is a reason I read the book.

I saw both movies when I was a teenager and the Color of Money spurred a big boom in people playing pool everywhere. Pool halls opened up and it was popular. Watching the movies now it is sad to know that there are so few of these places now and most people are so content to stay inside and stare at their phones. I played pool as a teenager and remember the times. Both movies are of an other time.

Off and on over the years I used to like to play in occasional poker tournaments, but I did not play poker cash games. I used to win at them like 20 years ago consistently, then suddenly I started to lose. What happened was that online players started to adapt to the style of play I was using and countered it and their strategies spread. It took me awhile to figure that out and then I didn’t play as much, getting into other stuff.

I tended to lose at playing low limit cash games back then, because I didn’t take it seriously and thought the tournaments were more fun.

Then the lockdowns came in 2020 and we couldn’t go anywhere.

As they ended, most people started to travel and many have continued to do so.

One thing I decided to do was to try to play poker again and take the cash games more seriously. I drove to a casino and played a cash game limit higher than I ever played before, because I knew it would force me to take it more seriously and try to play better. I had only played 1-2 or 1-3 before.

One of the first hands I played I flopped a pair with AK and check raised this guy and then he reraised me back. That is something I wasn’t expecting and was surprised by - and intimidated by at that moment - and I folded my hand.

He did something similar in another hand I was in with him later and played very aggressive, but he was not a nut, and knew what he was doing. He looked like a winning player.

I came out even or barely ahead and so was very happy.

Then I played again the next day and the guy was at the table again.

He was in his 50’s and we started to talk and he mentioned that he once was a pool hustler.

He talked about shooting pool and said that it is nothing like the movie The Color of Money. Being a pool hustler is not about trying to pretend you are a bad player and suckering people into trying to take advantage of you. It’s about making them WANT to play against you when you are better than them and making it so that they WANT the challenge of trying to beat you.

Well, I’ve played enough poker since then to have a much better understanding of it then I had before. I have seen a lot of the poker players break down and give their money away when they can get tipped over into doing exactly what this guy described in pool hustling.

The conversation I had with him was four years ago and it stuck in my mind and came back to me and I was thinking - I think that guy was trying to hustle me with that check raise and other bets that first day, but I didn’t fall for it, and one reason why is I was simply playing super conservative that day.

Of course, there is another type of person in the casinos that just is motivated to lose. Jim Dines talked about that in his investing book that I read when I first started trading.

I went and watched the Hustler the other month and highlighted one scene in it for you the other week. Now I want talk about another one.

When I was a kid I didn’t understand it or missed what was said in it, but now I do.

Paul Newman as Fast Eddie is beating Gleason’s character Minnesota Fats at pool and Fats and his backer aren’t sure what to do. After this scene they play for hours and Newman gets drunk and loses.

I was talking with another friend who saw this movie recently and asked him why did Newman lose and he said he got drunk, but Fats drinks too with him.

What really happened is that in this clip here Newman says something that Fats and his backer realize means that Eddie is going to lose if he keeps playing.

Fast Eddie is a loser.

The movie is about how he builds “character” and ends up beating Fats, because of it in the end.

The stock market is not much different.

Most people lose in stock trading.

In fact, everyone loses at stock trading!

If you win to start out then eventually you are going to lose.

To be successful in the markets the capital gains have to be bigger than the losses.

What separates people who are successful in the markets and people who never get successful is character.

You get character in the markets when you LEARN from your mistakes that lead you to losing when you shouldn’t.

That means you gotta admit you messed up and need to LEARN to do better.

Most people CANNOT do that, they just don’t want to take that much PERSONAL RESPONSABILITY for their results.

Instead, they end up losing, and blaming something besides themselves for that - like “manipulators” or “bad luck” or “bad news” - and then try to jump into something new that will make things different for them. That may mean jumping from stocks to options or jumping from one sector that has gone bearish to the now hot or popular sector without first having learned from their experience before, so even if they start to win in this new thing they still end up becoming losers again when the trend shifts.

A way to describe that nowadays is to say they are simply mass meme chasers.

All traders, who are successful, become winning traders AFTER they take losses and LEARN from it. That means studying, having a mentor, finding ways to learn. But today, so many people just stay glued to social media streams and feeds that keep them from doing any of that.

They need to turn it off and read some trading books and get more involved with people successful in the markets.

That’s what this email newsletter is about.