Mind Over Poker

In today's current economic environment, unfortunately the concept of risk is being hammered home. All too many investors have lost a lot of value over the last year, even in what were perceived to be safe assets. Stocks of large blue-chip companies have depreciated greatly. Companies in the financial sector have turned insolvent seemingly overnight. Housing prices have plummeted. There appears to be no safe haven, and everyone is asking, how did this happen?

The nature of this economic turmoil is certainly historic, and has been deemed "the biggest economic crisis since the Great Depression," or "a once in a century occurrence." There's no question that this climate is unprecedented for most of today's investors, which explains why so many were caught off guard. It's hard to appreciate the magnitude of risk when you haven't actually experienced the downside potential. While we intuitively understand that there is risk with investments, we consider some investments relatively safe. Real estate always goes up. Blue-chip companies are safe bets. As anyone who has ever gotten aces cracked knows, there are no absolutes.

That's why I'm always surprised by how many poker players play pocket aces like they are guaranteed to win. When they misplay them and lose, they seem shocked at their bad luck. If the current economic crisis is indeed a once in a century occurrence, investors can be forgiven for being caught unprepared. No one holding aces has such an excuse. Even if you're heads up with those aces, you're generally going to be around a 4-1 favorite. That's overwhelming, yes, but not invincible. By odds, they'll get cracked close to 20 percent of the time. Add one more player to the hand and those odds will get cut down again, making you perhaps a 60 percent favorite. (By way of an example, if you're up against two other players, one holding a small pocket pair and the other suited connectors, you are approximately a 60 percent favorite.) You shouldn't be surprised at all if you lose in those situations.

Of course, if you play aces correctly, you can greatly reduce the odds of losing. So, how do we play them correctly? The point of this column is not to discuss the strategy, as the potential circumstances are great and varied, but to get you in the right frame of mind to make the proper decisions. The first and most critical step is to properly evaluate the risk. It's OK if your eyes grow big and your confidence swells when you first take a peek at those cards. Enjoy that initial euphoria for about a second, and then get back to playing poker. Your hand is unlikely to improve, so start playing it as such. Think of it this way: When you flop top pair, top kicker with a flush draw out there, are you going to slow-play? It's much easier to get in that frame of mind after the flop, but you should be thinking of it the same way preflop, as well. Aces are a monster preflop, but very vulnerable afterward. Think ahead.

Not recognizing risk is a huge mistake. When you are too comfortable, you let your guard down and you forget that anything can happen. You start thinking of how much money you're going to make, and you stop playing poker. With the recognition of risk comes contemplation and analysis that I hope will permeate all of your decisions.

David Apostolico is the author of numerous poker-strategy books, including Tournament Poker and The Art of War and Machiavellian Poker Strategy.