Are You Making Financial Decisions Like A Shark Or A Fish?

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Are you a shark or fish when it comes to money? I explain how being a fish holds you back and a shark helps you grow your money.

The following is a contribution from my friend Nate at InvestmentZen. 

If you approach your personal finances like a gambler, I think we can all agree things are usually going to end very poorly. But today, we’re going to look at an exception to this rule.

Everyone knows the old gambling quote, “the house always wins.” This old adage tells us two things:

  1. The casino business is extremely lucrative.
  2. The gambler always loses in the long run.

The second statement is true for all casino games except poker.

What Makes Poker Different?


Poker is unique among casino games – it’s the only game where you’re not actually playing against the house. Instead, you’re playing against other players.

So while the house still takes its cut, if you happen to be a shark playing among fish, you’re likely to win money long-term!

Why Should We Care?


I’m definitely not suggesting you take up playing poker as your path to wealth. But I do find it interesting that the same kind of thinking that leads to winning chips at the poker table leads to good financial decision-making in life.

In fact, there is such a strong correlation between good poker playing and good financial decision-making that hedge funds have been known to hire winning poker players as professional traders.

Unfortunately, many of us make financial decisions like losing poker players.

We wait in anticipation on every card dealt, hoping that it’ll be our lucky day. We shove our chips into the center, hoping to scare everyone away and win the pot. We call every bet, hoping to catch someone bluffing. Or we fold in the face of aggression because we don’t want to be beat.

The fish loses money at the poker table because they fail to understand this basic truth:

Winning at poker isn’t about getting lucky with the cards. Eventually, everyone will have their fair share of good hands and bad hands. Poker pros don’t make money because they get good cards; they make money because they make thousands upon thousands of decisions that have positive expected value (+EV).

In the short-term, the pro might lose and the fish might win. But by consistently making decisions that have a positive expected value, the pro wins money in the long run while the fish waits around, hoping to get lucky.

Interestingly, the way a fish thinks at a poker table is the way a lot of us think about money in our life.

How many people think that self-made millionaires just got lucky? How many people look at someone selling their business for millions and think, ‘man, I wish I could hit it big’ ?

How many people completely overlook the years of daily grinding, constant study, repeated failures and calculated risks it took to achieve overnight success?

How many of us wait for luck to strike while doing nothing to create our own opportunities for financial success?

Fish will make decisions because of FOMO


Good decision making in poker requires looking at a range of probable outcomes. There’s no way to know exactly what hand the other player holds, but a skilled player draws on their experience and careful study of the situation to narrow down an opposing player’s range of possible hands.

Then they decide if calling/betting/folding has positive expected value (+EV) or negative expected value (-EV). But a bad poker player isn’t evaluating this situation based on the range of hands. Bad poker players (fish) make the decision to call, bet or fold hoping to get lucky and win the pot.

This is like buying a stock because you got a hot tip from a co-worker. Or buying a house with a mortgage you can barely afford because the market is hot.

Instead of analyzing the range of possible outcomes and weighing it against risk and reward, the fish lets FOMO guide their investment decisions. To the fish, it’s not about expected value – it’s about winning the pot in front of them.

This is the same decision-making process that gets people to spend hundreds of dollars a month on lottery tickets, spend hours at the casino trying to “get back to even” or buy into get rich quick scams.

Fish will make a financial move so they don’t miss out on a once-in-a-lifetime opportunity. But the shark knows there’s no such thing as a once in a lifetime opportunity – just a series of decisions, some with +EV, some with -EV.

If your decisions have positive expected value, you will win money in the long run. If your decisions have negative expected value, you will lose money in the long run.

Fish are scared to make a move because there’s a chance of loss


While one type of fish desperately tries to win every pot, other types of fish try not to lose money. They think to themselves, “what if the other player has a better hand? I better fold and save my money.” While the fish waits for the perfect hand to play, the shark is constantly putting themselves into situations where they have tiny mathematical advantages.

For example, the shark might bet in a situation where they don’t have good cards, but they know the fish is likely to fold. This lets them pick up money that fish leave on the table.

In the short run, the results at the poker table look like random chance, but over time, the shark wins money by picking up the dozens of little pots that the fish is giving up on because they’re scared to lose. Ironically, by playing not to lose, the fish inevitably bleeds their money away.

The shark can still lose in the short-term by pushing tiny edges in expected value, but in the long run, those tiny edges make them a lifetime winner.

Think about how this applies to our finances. How many people hold their life savings in cash because they’re paralyzed with fear? How many people don’t change careers or start their own business because they’re paralyzed by the “what ifs” of the unknown? How many people sell off their portfolio during a market downturn and miss the upswing?

We know that many DIY investors underperform the market because they sell-off on downturns and buy as the market is hitting its peak. It’s definitely a -EV investing strategy.

But instead of assessing the long term consequences of their decision-making, their hardwired loss aversion causes them to buy high and sell low. Instead of being paralyzed by the unknown, a shark will make a financial move if it has positive expected value, even if they can’t be 100 percent certain their decision will make them money in the short run.

Are you a shark or fish when it comes to money? I explain how being a fish holds you back and a shark helps you grow your money.

How To Make Financial Decisions That Have Positive Expected Value


When you win a big pot at the poker table you feel like a winner. When you lose a big pot, you feel like a loser. Our instincts don’t care if we made the right decision – our brain simply reinforces wins and conditions us to avoid loss.

Yet we know that you can make money in the short-term and still lose, and you can lose money in the short-term and still win. That’s what makes poker so tricky, and it’s an important lesson we can apply to our finances.

We need to avoid making decisions based on our emotional reaction to our current circumstances. We don’t want to be the investor who buys when the market is hot and sells when it drops. We’d be acting like a fish at a poker table, making -EV moves that ensure we’re going to lose money in the long term.

Like in poker, making smart financial decisions isn’t about getting lucky or forecasting the future – it just looks that way to the fish. It’s actually about making decisions with positive expectancy. To ensure you’re making the right decisions, there’s no replacement for financial education.

The more confident you are in your financial knowledge, the better you’ll be able to assess whether a given financial move is +EV or -EV. As a start, here are some common +EV financial moves that often look like losers in the short term:

  • Investing in a balanced portfolio of low-cost index funds – either DIY through a discount brokerage, or by having it managed by a low-cost robo-advisor like Betterment. Assuming you’ve put in the work to build a diversified portfolio in accordance with your risk profile and time horizon, ignore the temptation to sell when the market goes down.
  • If you have the entrepreneurial itch – starting a business even if you read scary statistics like 8 out of 10 businesses fail. Statistics like this don’t take into account the +EV of building a life-changing business.
  • Performing due diligence and buying cash-flowing real estate – even if your neighbors and friends tell you nightmare stories about their experience as landlords.
  • Continuing to contribute to your tax-deferred retirement accounts according to your long-term investment plan, even when people around you are scared that the stock market is going to collapse. (The media always thinks the next crash is right around the corner, by the way).

You’ll also want to avoid these common -EV financial moves that look like winners in the short term:

  • Using debt to fuel the appearance of wealth
  • Getting into highly leveraged real estate investments just because the “market is hot.”
  • Buying individual stocks based on a hot tip overheard at work or from some TV guru.
  • Getting involved in get rich quick schemes – if someone truly has a system that will make you rich overnight, why are they selling you the system through a late night infomercial? Here’s where an old poker saying applies – if you can’t spot the fish at the table, you’re the fish.
  • Buying whole life insurance products as an investment – don’t mix insurance and investing.
  • Investing in load funds that promise above-market performance based on past returns. Don’t be fooled by survivorship bias.


Not all of us can be poker pros, but anyone of us can make everyday financial decisions like a shark. Growing your net worth isn’t about getting lucky, it’s simply about consistently making decisions that have positive expected value.

It’s not always easy and sometimes it will feel like you’re not making any progress. But you will win in the long run – it’s simple math.


What are you more like – a fish or a shark? When can you remember a time when making a positive expected value decision returned satisfying results? How about when a spur-of-the-moment or rash, emotional financial decision cost you?

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • Not quite the same thing, but when I played Magic the Gathering and was trying to build decks my husband would scold me. I kept trying to cover all of my bases, so as he put it I was playing to lose rather than win. I was too busy building a strong defense to create a winning offense.

    I got better, but part of me still always fretted about not having enough ways to cover myself against losing a game.

  • It makes sense to me even though I’m not a gambler, like, not even in the slightest. lol! I think there are a lot of people waiting around for their circumstances to change, versus the other way around. Sadly, most, if not all, will be waiting a long time.

  • LOVE the poker-theme post! I could totally relate to these analogies and I’m actually planning on playing this weekend in a $350 tournament. Hopefully it’s +EV and not just +EV in my head ; )

  • “We need to avoid making decisions based on our emotional reaction to our current circumstances. We don’t want to be the investor who buys when the market is hot and sells when it drops.”

    Very wise words. I’m not a poker player, but I really appreciate the analogies nonetheless.

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