Lesson 1: if you’re gonna play the game, ya gotta learn to play it right
While it seems self-evident to suggest that if one is to play a game they ought to do so correctly, the implicit reference is that there is, in fact, a ‘right’ and a ‘wrong’ way to play a speculators game. One interpretation of the phrase is that there are those that gamble for the sake of gambling and those who gamble to win. Games can be for fun or they can be played professionally and in terms of investing, the same could be said for those investors that do it for amusement and those who speculate in an informed manner with the objective of making a profit. Money is usually made by one at the expense of the other.
Lesson 2: you gotta know when to hold’em, know when to fold’em
While this best known phrase references a card game, it most certainly applies to investing too. The perennial challenge to investors is knowing exactly when to stay in a position or when to exit. Whether it be through hard stops (e.g. making x% and then exiting), stop-losses, risk/reward based thresholds (e.g. making some multiplier of the amount risked) or some other method (e.g. guessing), the genius of the phrase is in its subtlety. How does one “know when to hold’em”? Presumably this knowledge comes by having rules and experience with those rules, not only for entering but also for exiting. Professional traders and novice traders may take the same risk on an investment, however professionals manage their risks much more carefully recognizing that if required, they will be ready to ‘fold’ – an expensive lesson many novice investors come to learn the hard way.