Red Joker Rules: The 35 Rules of Gambling That All Investors Should Know

By Pat Holland

"Gambling is investing, and investing is gambling," says the Red Joker.
Both situations begin with a common pool of money. The pool is distributed among those who have created it on the basis of a series of events that are partly controllable. Through a mixture of skills, self-control and sheer luck, some of those who have created it will receive more than others.
There is no inherent difference between sifting through a horse's prospects of winning a race and a company's prospects of returning regular profits. There is no inherent difference in deciding whether to raise the betting on a particular hand of cards and deciding whether a property is a good or bad buy.
But there is a world of difference between the pace of gambling and the pace of investing. A gambler faces as many investment situations in a week as an investor does in a lifetime. The rules are the same, but the gambler is in a situation where he can learn the rules very quickly.
This is a book of advice from the gambler to the investor - The Red Joker Rules.

• Language: English
• Publisher: Harriman House
• Release date: Feb 23, 2010
• ISBN: 9780857190178

Pat Holland

Pat Holland, B.Sc. has been a maths teacher and a recreational gambler for most of his life. Today he works as a freelance writer and takes an interest in the world of investment. He has long been interested in the common links between the principles of gambling and those of investment, and has been gathering the material for this book for many years. Pat Holland is married with three grown-up children, and is the author of three previous books and several thousand articles.

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First published in Great Britain in 2009

Copyright © Harriman House Ltd

The right of Pat Holland to be identified as Author has been asserted in accordance with the Copyright, Design and Patents Act 1988

ISBN: 978-0-85719-017-8

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No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by thepublisher, by the author, or by the employers of the author.

Biography

Pat Holland, B.Sc. has been a maths teacher and a recreational gambler for most of his life. Today he works as a freelance writer and takes an interest in the world of investment.

He has long been interested in the common links between the principles of gambling and those of investment, and has been gathering the material for this book for many years.

Pat Holland is married with three grown-up children, and is the author of three previous books and several thousand articles.

Introduction

'Gambling is investing, and investing is gambling,' says the Red Joker.

Both situations begin with a common pool of money. The pool is distributed among those who have created it on the basis of a series of events that are partly controllable. Through a mixture of skills, self-control and sheer luck, some of those who have created it will receive more than others.

There is no inherent difference between sifting through a horse's prospects of winning a race and a company's prospects of returning regular profits. There is no inherent difference in deciding whether to raise the betting on a particular hand of cards and deciding whether a property is a good or bad buy.

But there is a world of difference between the pace of gambling and the pace of investing. A gambler faces as many investment situations in a week as an investor does in a lifetime. The rules are the same, but the gambler is in a situation where he can learn the rules very quickly.

This is a book of advice from the gambler to the investor - The Red Joker Rules.

Prologue

The Red Joker sat at a plain wooden table covered in dust.

While we watched, he wrote absent-mindedly in the dust with a finger as long and as pale as a candle. His tunic and hat blazed scarlet and gold. Tiny bells swung noiselessly from the lobes of his hat and the collar that covered his shoulders.

His other hand moved stacks of what might have been old gold coins, or scarlet chips.

‘Enter,’ he said.

He did not rise, but indicated that I should sit opposite him.

‘Red Joker Rules,’ he said.

I sat down.

‘This is a rare honour,’ I said. ‘The Common Man does not normally get the chance to encounter the Red Joker.’

‘You have encountered me every day of your gambling life. At every turn of a card, every photo finish, every rattle of the dice, I have been speaking to you.’

‘I do not mean that. I mean face to face, the kind of interview you are about to grant me now.’

‘Yes, I can see that such an interview is unexpected.’

The Red Joker smiled.

‘But, then, I would not be the Red Joker if I did not sometimes do the unexpected.’

Gambling is Investing

Common Man: Thank you, sir, for granting this interview.

Red Joker: I decided the time was ready to expand on my oft-repeated statement that there is no qualitative difference between the processes of gambling and investing. And that the common principles can be more quickly learned from gambling situations than from investment situations.

CM: So how should I address you?

RJ: You could call me the Red Joker, the playing card that is an observer in some games and a live, disruptive presence in others. And whose long experience with gamblers places him in a position to offer advice. Or you could consider me to be some embodiment of the subconscious wisdom acquired by you and others over your gambling years.

I prefer that you think of me as the spirit of gambling. The spirit you encounter every time you place a bet. The voice that speaks to you though you are not aware of it, the sum-total of experience and wisdom and emotion to be found in the gambling world. If war can have its Mars and love its Venus, why should gambling not have its Red Joker, especially as his essence transfers so perfectly to the investment world you now wish to enter?CM: I do not mean that. I mean, what should I call you during this interview?

RJ: [slightly piqued]: Sir, will do very well.

CM: Thank you, Sir. Let me begin by asking why we should concern ourselves with good gambling principles if they are the same as good investing principles? It just costs time.

RJ: You are now in disagreement with a philosopher as great as Rousseau, who advocated that young men be given some money to gamble, as a fast way of learning the lessons of life. I also disagree with Rousseau because some of them will do nothing else for the rest of their lives. And ruin themselves.

But the principle is correct. Gambling is investing.

Consider a poker player who is dealt a total of 200 hands in an average session. For each of these hands, he will have to decide whether or not to risk money by playing it further. He is already an investor. He will further have to decide, on the basis of other cards dealt to his hand, whether he should raise the investment or write it off – perhaps half a dozen times in a single hand.

There is no difference in deciding that a full house is worth investing in, or discarding – regardless of whether that house is three tens and two jacks in your hand, or a semi-detached for sale by a one-eyed retired night watchman in East Helsinki.

Weigh the factors, commit the money. And because of the pace of gambling, the core principles become obvious much more quickly.

CM: But gamblers lose and investors gain.

RJ: I doubt that you would have been better off snapping up shares in Wall Street in