Editor's Note: This column by Doug Kass is a special bonus for TheStreet.com readers. It appeared on Street Insight on Jan. 24. For more information about Street Insight , please click here.


This weekend I participated in several events at Jack Binion's Gold Strike Casino in Tunica, Miss. -- leading up to the estimated $5 million World Series of Poker, which started Monday.

I did well and managed to pay for my trip, winning a small tournament. But in the end, I decided that my day job should trump playing in the finals (along with about 700 other participants and a first-place prize of about $2 million dollars!), which would have taken most of this week to determine its outcome.

Moreover, after observing Gus Hansen, Phil Ivey, Johnny Chan, Chip Reese, Men "the Master" Nguyen, Sam Farha and Barry "Robin Hood" Greenstein play on table No. 29 for nearly 40 hours straight (and with average pots in the neighborhood of $300,000), I concluded that I had little chance to survive into the final table this Thursday.

It would be like trying to out-trade Stevie Cohen, Stanley Druckenmiller, George Soros and Leon Cooperman!

It was an extraordinary weekend on many different levels, but as always, I want to relate my experiences to the stock market.

Poker and trading/investing hold many similarities, and after spending a brief period of time with the greatest poker player of all time, Doyle "Texas Dolly" Brunson, here are some of the parallels between both activities.

Poker, like trading/investing, is a game of people. In both activities, one needs to get inside the head of one's opponent or the collective head of the masses to be able to consistently win. Importantly, in both venues, one has to know what makes your opponent or the market tick. And one has to know the mood of one's opponent or the psychological condition of investors who set share prices.

Neither poker nor the market can be played purely mathematically or statistically. Many computer programmers have tried to game poker and the stock market, but they have failed, since a program is unable to understand the perception of the moment, as judgment requires a human mind.

So, after spending 18 hours a day for four days playing poker, here are some of the specific parallels I have observed.

Pay attention ... and it will pay you. Concentrate on everything when you are playing/trading. Watch and listen; remember to do both and relate the two.

Understand when to play aggressively. It's the winning way. Don't be a tight or loose player/trader; be a solid one and recognize when it is time to press your bets/positions. To attain superior returns in poker and investing over the long run, grind it out (in stocks until you are up 30%-40%, and then if you have convictions, go for a 100% year). If you can avoid losing and put together a few 100% years, you can achieve outstanding long-term investment performance.

Tells: Look for them, and you will find them. Poker players and stock markets have tells -- giveaway moves that are very revealing. Learn to recognize them. History is your textbook. (For example, improving corporate financials usually presage a rally; conversely, deteriorating financials usually augur poor market performance.)

ESP ... it's a jellyroll. In those rare instances when all your card knowledge and market judgment/knowledge leave you in doubt, go with your strong feelings and not against them.

Honor: a gambler/trader's ace in the hole. A good reputation and respect from others will put you in good stead.

Be as competitive as you can be. Go into a poker game and into a trade with the idea of completely destroying your opponent or scoring a major investment coup. If you win a pot or make a successful trade, nearly always play the next pot or make the next trade shortly thereafter -- within reason. Although the cards and trades might break even in the long run, rushes do happen, and momentum often feeds upon itself. When you earn the right to be aggressive, you should be aggressive. When you have a tremendous conviction in a poker hand or trade, you have to go for the jugular.

Art and science ... it takes both. Both activities are more art than science -- that's why they are so difficult to master. Knowing what to do is about 10% of the game. Knowing how to do it is the other 90%.

Money management. The same sound principles of money control apply to the business of tournament/professional poker and to successful investing. The way to build long-term returns or poker winnings is through preservation of capital and home runs.

The important twins of poker/investing, patience and staying power. Come to the poker table or to the markets with enough time to stay, and play for a while.

Alertness is a key. You must stay alert at all times.

So is discipline.

Never let your mind dwell on personal problems. Never play/trade when you are upset. Make a conscious and constant effort to discover any leaks in your play, and then eliminate them.

Control your emotions. Allowing your confidence to be shaken can turn a simple losing streak into a terrible case of going bad. Keep your emotions in check. When you lose a pot or make a poor investment decision, get up, walk around the chair or take some deep breaths. Don't lose your poise. If a trade, or if poker hand does not work out, walk away from the position/hand. Be confident enough about your ability to win afterwards.

Schedule vacations. It is important to give both your mind and your body a rest.

Doug Kass is general partner for three investment partnerships, Circle T Market Neutral L.P., Seabreeze Partners L.P. and Kass Partners LLC. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a general partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. At time of publication, Kass and/or his funds had no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kass appreciates your feedback and invites you to send it to dkass@thestreet.com.

More from Markets

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing