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The great investment guru poker showdown
Four money managers, two pro gamblers, a table in Vegas and a challenge to the laws of investing.
April 29, 2005: 12:07 PM EDT
By Stephen Gandel, MONEY Magazine

NEW YORK (MONEY Magazine) - Until Bill Miller did it, nobody ever called 76-year-old Walter Clyde "Puggy" Pearson a giant of the investing world.

Pearson's formal education stopped in fifth grade. He's a professional gambler. And his only run-in with the market -- after dabbling for a few years he bought tech stocks in 1999 -- ended badly.

But Pearson, who won the World Series of Poker in 1973, happens to be one of the card game's great philosophers. Among his pearls of wisdom is this: "Ain't only three things to gambling: knowing the 60-40 end of the proposition, money management and knowin' yourself." Miller recently called that statement "all you need to know about investing."

If Pearson's homespun adage hardly seems to measure up to, say, Ben Graham's learned tome "Security Analysis," consider two things. First, Miller, the only fund manager in history to beat the S&P 500 for 14 years in a row, probably recognizes investment wisdom when he hears it.

And second, the similarity between poker and investing has long been Wall Street dogma. Some firms look for card-playing skills when hiring; others use poker to train traders. None other than Peter Lynch, the legendary chief of Fidelity Magellan in the 1980s, has said that poker, of all games, is the most like stock investing.

Having heard so much of this talk over the years, we at MONEY decided to call our poker-obsessed sources' bluff. We invited Miller and three other world-class fund managers -- all true believers of the poker-is-investing theory -- to show their stuff in a winner-take-all game of Texas Hold 'Em. Played late last year at Harrah's in Las Vegas, the game brought together probably the greatest array of investing talent ever to sit around one poker table.

In addition to Miller were fund heavyweights Mario Gabelli, Bill Gross and John Rogers. Their competition: poker pros Johnny Chan, the most recent player to win the World Series of Poker two years in a row, and Jennifer Harman, one of the world's best female poker players and a featured team member on (A death in his family, unfortunately, kept Pearson from playing.) This writer also played, as did editor Alexander Haris.

Who won? And what did we learn about investing? Ah, well. To find out, just ante up some attention and read on.

The first rule of poker


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