I am referring to Texas Hold'em - the ubiquitous card game played in college campuses, casinos and card rooms across North America.
This is how it is played.
Players compete for an amount of money, known as the 'pot', which every player contributes to. The cards are dealt randomly and each player starts with only two cards, dealt face down.
The game is divided into a series of hands, that is, a number of rounds. At the conclusion of each hand, the pot is typically awarded to the player with the best hand.
How is this determined? Your poker hand will be compared with other players' at the end of each hand.
If, say, you hold a four of a kind - this occurs when you have four of the cards of one type - this certainly trumps one pair that your friendly opponent might have.
Clearly, a player's objective is to maximise his long-term winnings, not just a few rounds. Players do this by making decisions about when and how much to bet, raise, call, or fold - various jargon words linked with the game.
I got hooked. Like investing, poker is about good decision-making despite having incomplete information.
You want to increase the odds in your favour by playing those hands where you have the best hand, or when the probabilities are clearly stacked on your side.
I thought I was the only one who felt that poker could deliver a lesson or two on investing. Then in class one day, my Duke University economics professor, Emma Rasiel, took out a stack of cards and made us play Texas Hold'em.
'It affects your decision-making process when your own money is involved,' she said, as she made us jot down how we placed our bets and had us analyse our game plan.
While playing, I wondered why I made decisions I ought not to. For instance, why did I ride out my cards through the end, even when it was clear that mathematically I should have folded, or called it quits?
Unlike amateur players, experienced poker players are willing to fold even when they possess a decent set of cards and to walk away when the odds are no longer in their favour.
Good investors do that too. They may have splurged on a stock or building project, for example, but if developments mid-way alter the company's prospects or make the location less attractive, they are mentally ready to cut their losses instead of sinking in more money to salvage their investment.
Local entrepreneur Chan Chong Beng once told me how, after he took his wallpaper and furnishings business to Beijing more than a decade ago, he faced a big setback. His Chinese partner had hired a local woman to do their finances, but she claimed she could not collect the cash from the customers.
Mr Chan's Chinese partner backed her story. 'There was no way I could find out if these two were telling the truth,' said Mr Chan, the founder of Goodrich Global. 'I decided to cut my losses, and let go of our China operations. We lost $750,000 in just two years.'
Often, people do not cut their losses as they believe what comes down would eventually go up.
I was renewing my fixed deposit at a bank in 2002 when the relationship manager persuaded me to put that sum into a technology-themed unit trust. I saw an opportunity - given that tech shares had plunged after the dot.com bubble burst two years earlier.
But I had erred. I paid too high a price for a fund that did not contain veritable names in the tech business.
Fast forward to the year 2005. To carry on with the unit trust would mean sitting on a paper loss, but to get out of the decision that I made years ago would have validated my current loss, I thought at that time.
To redeem or not to redeem? That was a tough call.
That same year, I got out of my unit trust with a 30 per cent loss. In retrospect, my hesitation to fold stemmed from the hope that my investment would rebound.
In poker, like in investing, hope can be costly.
Hoping the last card will compensate for the poor cards you have in hand as well as those sitting at the poker table represents poor decision-making.
It is possible that in folding, you fold too early, but we should not confuse timing with hope. After all, wishing for a stock to rise in value certainly plays no part in making it happen.
I have since recouped my losses after ploughing the remaining money into energy stocks. If only I had realised my losses much earlier, I look back and consider wistfully.
Nevertheless, I tell myself the most important lesson learnt was to actually be pro-active and do the deed.
As the popular business saying goes: 'There is no sin in being wrong. The sin is in staying wrong.'
