Investing and poker are highly analogous (chess and investing, not so much), so even though I don't play poker anymore, sometimes I'll "cross-train" by reading a poker book, like Your Worst Poker Enemy, which is about poker psychology.
The author, Schoonmaker, thinks that there are some highly gifted intuition or "gut" based players, but that everyone else should stick to making decisions according to a rules based system specified in advance.
He really belabors this point about the difference between logic and intuition. But is there really a difference? Isn't intuition just a pattern matching logic that's encoded in the neural network in a way that's difficult to articulate?
And even if you are an "intuitive" player, you still need to be disciplined. Anyway, the book is directed at the great mass of poker players who are overconfident and undisciplined.
Being overconfident leads players to play at tables where they are outmatched. He mentions the old saying: it doesn't matter if you're the tenth best poker player in the world if the other nine are at your table. This is why our ideal investing situation is when there is no one with brains (preferably an index fund or something) taking the other side of our trade. We don't like Bill Ackman, of course, but can't we find a trade where he is not on the other side?
Being undisciplined leads to players playing too many hands. This is also like investing. I was realizing over the weekend that in the past decade I have had about four good ideas. (Some were themes that lead to trades in a number of companies, but those are just applications of the novel idea, the theme.) It's hard for investors to sit still for a year or more waiting for a really good idea.
So why aren't all poker players disciplined, if it is a beneficial trait? It's because of the randomness of poker: the reinforcement pattern makes it hard to extinguish bad habits unless you really want to. Investing is like this too, and the essay Untangling Skill and Luck [pdf] talks about this. The uneven reinforcement pattern is going to keep the vast majority of poker players and investors undisciplined.
Similarly, poker players are not going to stop being overconfident, because that seems to be an adaptation that many people have (and few don't):
"Like other decision-making biases, overconfidence seems detrimental because it increases the frequency and costs of fighting. However, evolutionary biologists have proposed that overconfidence may also confer adaptive advantages: increasing ambition, resolve, persistence, bluffing opponents, and winning net payoffs from risky opportunities despite occasional failures."So there is money to be made by those who are properly calibrated. Maybe the well calibrated won't rise to the level of billionaires - "sociopath took insane risk, got lucky" - but successful enough so that they can live off of their capital.
Being disciplined and appropriately calibrated is like being a tight-aggressive poker player. Not seeing a lot of hands but not being afraid to risk a lot of chips when expected value favors you.
Couple other worthwhile thoughts from the book about psychology. It is very common for people to play badly (make bad decisions) when they are losing (down). Because of the randomness in poker and investing, they are a "bad foundation for self concept". People in these fields probably need a hobby or another business where the progress and payoffs are more linear. Think of weightlifting and physical fitness.