I’m not the best poker player, but I make sure to brush up on my skills before occasionally trying my luck in Vegas. One of my favorite resources is Harrington’s book on poker strategy.

The first time I put its lessons to the test, I found myself playing an overly cautious game. Harrington’s advice made me realize that most of the time, my pocket cards weren’t worth betting on. So, I spent most of the night folding and observing from the sidelines. While this approach kept my wallet safe, it also made the game pretty boring.

Over dinner that night, I mulled over my experience. I realized I had rigidly followed the book’s advice, overlooking the actual dynamics at my table. Some players were there just for the thrill, staying in the game regardless of their weak pocket cards, eagerly anticipating the flop. It dawned on me that these players were my real opportunity. To capitalize, I needed to stay in the game more often.

The next day, I switched gears. I started staying in more hands, especially when only the overly aggressive players were involved. It wasn’t about reckless betting; it was about reading the room and leveraging others’ behaviors to my advantage.

Reflecting on this experience, I drew a parallel to investing, my true passion.

My initial poker strategy was like being a value investor fixated solely on valuation, ignoring the market’s sentiment and momentum. Just as I found success at the poker table by blending “valuation” with reading the sentiment of other players, active stock pickers can also thrive by combining valuation with market sentiment (aka momentum).