Regret

Jason Zweig’s Your Money and Your Brain reports research that shows that emotions have caused millions of irrational investing decisions. The same emotions cause countless poker mistakes.

Regret Is Very Painful

His “Regret” chapter says, “Losing money on investment mistakes can make you feel almost unimaginatively miserable… You kick yourself with thoughts like, ‘What on earth was I thinking?’…

“Your regret is … more painful when:

“The outcome seems to have been caused by your own actions, not by circumstances beyond your control…

“Your mistake was a result of what you did rather than what you did not do…

“The action you took was a departure from your normal behavior.”

After making a mistake, “you can eat yourself up in an endless cycle of ‘woulda, coulda, shoulda.’”

Regret Answers A Question

You’ve probably wondered, “Why do I play longer when I’m losing than when I’m winning?”

It’s obviously irrational: Winning suggests you have an edge, while losing suggests the opposite. Yet nearly everybody plays longer when losing than winning.

Investors – even professionals – make the same mistake. “Professional money managers… cling to their losing stocks more than twice as long as they hold winners…

“Individual investors cashed in on more than 51 percent of their gains than their losses…

“21.5 percent never sold a single stock that had dropped in price!”

“People trying to sell their house will hold out longer when they are facing a loss – and will often take the house off the market rather than lose money.”

Why do so many people make that stupid mistake? Because “the only thing worse than losing is having to admit you’re a loser…

“What makes no economic sense makes perfect emotional sense. When you sell a loser… you don’t just take an economic loss; you take a psychological loss from admitting you made a mistake. You are punishing yourself when you sell… On the other hand, selling a winner is a form of rewarding yourself.”

Regret Causes Chasing

Chasing is extremely expensive and it’s partly caused by wanting to avoid admitting mistakes. The more you’ve invested, the more foolishly you’ll chase. David Sklansky recommends ignoring how much you’ve invested: Consider only the pot’s size and your chances of winning it.

Your rational brain may agree, but your emotions don’t: “Once you make an investment, you can’t help regarding it as yours. You have invested part of yourself in it… it becomes a part of you… the prospect of having to get rid of it becomes a wrenching thought.”

We’ve all had that feeling. We know that chasing is -EV, but we do it. We may even know we’re making a mistake, but just can’t fold. We may even say to ourselves, “I know I shouldn’t call, but I’ve gone this far…”

Anticipating Regret Is Almost As Painful As Actual Regret

Regret occurs after the fact, but we sometimes anticipate it. That anticipation creates the crude equivalent of “Newton’s First Law of Motion, investors at rest tend to stay at rest… Instead of taking action wherever necessary, we do nothing wherever possible.”

Regret Causes Passivity

We saw that mistakes are more painful when they’re “a result of what you did rather than what you did not do.” If your bet or raise costs money, it’s more painful than losing by checking or calling. To avoid that pain, you may sometimes play too passively.

You know that poker rewards aggression. When you call, you can’t win without showing down the best hand. Betting and raising can win without it, but you sometimes ignore that fact to reduce the pain of anticipated regret.

Regret Prevents Us From Changing Our Minds

Some friends disagreed when I wrote that that Doyle Brunson gave terrible advice: “Stick to your first impression. Have the courage of your convictions.”

We’ve repeatedly argued about whether people make better decisions quickly or slowly, but nobody had good evidence. This book provided solid evidence that you should change your opinions and explained why we don’t do it: We anticipate regret.

“Almost everyone believes that, even when you think your first answer on a test might be wrong, you still should ‘stick with your first instinct’ rather than change your answer. But test-takers who switch their answers are twice as likely to go from wrong to right as from right to wrong…

“You tend to overestimate how many times you changed your original right answers to wrong – and to underestimate how often you should have switched from your first answers… So you expect to feel foolish if you change an answer.”

Regret Prevents Developing Our Game

We saw that: “Your regret is likely to be … more painful when… The action you took was a departure from your normal behavior.” To avoid that risk and the risk of changing our mind, we keep playing the same old way. If we change and make a costly mistake, we’ll regret it.

Can We Eliminate Regret?

Since regret causes serious problems, some people recommend eliminating it. Monks and others with years of intensive training can partly control regret and other feelings. Meditation, yoga, and psychotherapy can have similar – but much smaller – effects.

Some people claim they have learned how to eliminate or completely control negative feelings, but they’re denying reality. The only people who never feel regret are psychopaths, sociopaths, and ones with severe brain injuries.

Every normal, mentally healthy person has regrets and other negative emotions. You certainly do. For example, have you ever thought of beating up or even killing someone? Or stealing? Or cheating? Did you regret those thoughts?

Fortunately, you aren’t accountable for your feelings because the law and religion say you’re responsible only for what you can control, your actions. Even if you admit that you’d like to kill me, you can’t be prosecuted. However, because you can control what you do and say, you can go to jail for threatening to kill me.

Classical economists created a fictitious creature, the Economic Man, and claimed he was real. He’s completely and unemotionally rational. Virtually all poker authors accept this model. They tell us to ignore our emotions, but it’s utterly impossible.

You, me, and every Poker Hall of Famer are affected by negative emotions – including regret. You may intensely dislike it, but it’s unquestionably a fact. Don’t deny it.

Final Remarks

My friends, Preston Oade and Brad Cline, read this column and said it’s too negative. I agree.

It’s negative because regret is a negative emotion, and trying to reduce its pain causes stupid, costly mistakes. You will keep making those mistakes until you understand how regret (and other emotions) distort your thinking. You can’t control your emotional reactions without understanding how you feel and why you feel that way.

You’ve seen that regret causes serious mistakes, and it increases the pain of ones you make for other reasons. Zweig wrote: “It’s impossible to invest without making mistakes, but it is possible to stop kicking yourself when you make them.”

You can’t play error-free poker, nor can you help regretting your mistakes, but you can learn how to react better to your feelings. That’s the subject of my next column. ♠

“Dr. Al” ([email protected]) coaches only on psychology issues. For information about seminars and webinars, go to propokerseminars.com. He is David Sklansky’s co-author of DUCY? and the sole author of four poker psychology books.