It was something Stu Ungar said, having made it to the final table of the 1997 Championship of Poker — the chip leader with only five players left to beat. He was already a two-time world champion, winning back-to-back titles almost two decades earlier in the game's signature event, the no-limit final event at Binion's World Series of Poker.

In 1980, Stu won the championship the first time he played no-limit hold'em; the following year, he won again. Still only twenty-six and looking more like an anemic teenager, he earned the nickname, "The Kid".

In the subsequent sixteen years, Stu's appearance hadn't changed for the better. But if he looked down on his luck that evening, nothing could be further from the truth. In an interview, he spoke of how great it felt to be back in the limelight, to have "everyone shaking your hand, asking how you're doing, you know what I'm saying?"

His insecurity was sad and charming and unwarranted. Fifty million people play the game in the United States, with another fifty million players internationally; throughout the world — certainly in my corner of the world, Wall Street — a poker champion is a very cool guy.

The American identity has been influenced by competing legacies, and poker appeals to a nostalgia for the Wild West in a society where the Puritan Ethic and conformism are weighing heavily. In a country where so many have staked their sense of self on religious, political and financial institutions increasingly defined by scandals, hypocrisy and theft, it's little wonder that poker players are admired, even envied. The elite players are, in many ways, the embodiment of what has come to be known as the American Dream: they have succeeded by relying on their skills and on their guts — and on themselves. Wall Street, by contrast, has prospered by playing fast and loose with other people's money.

In the twenty years since Stu's second championship, both gambling and investing have enjoyed extraordinary success. Poker emerged from the back rooms of bars to the luxury of billion-dollar casinos. In earlier days, living outside the mainstream, "you had to worry about being cheated, robbed or arrested," said legendary gambler Doyle Brunson, interviewed during a World Poker Tour telecast at the Bellagio.

In the 1990s, as poker pros came in from the cold, it was investors who had to worry about being cheated, and even robbed, by Corporate America — sometimes so egregiously that the suits found themselves getting arrested. The "crisis of confidence" suffered by investors has now faded, the irony being that very little has been done to prevent a reprise. The recent run-up in stock prices evidently is sufficient to calm the outrage — the financial equivalent of bread and circus. The credibility of Wall Street has taken a beating, however, and that damage can be overlooked but not easily undone.

Poker, meanwhile, has never been more popular. The championship event in 2003 drew more than 800 players, an increase from the field of 312 when Stu competed for his third title only six years earlier. Each player then and now was willing to put up $10,000, or was able to win an entry in side games, and the $2.5 million first prize went to a first-timer with a publicist's dream name. Chris Moneymaker, a 27-year-old accountant from Tennessee, parlayed a $40 entry fee at an Internet site into a seat in the big event and, from there, the championship — a return on investment that even Bill Gates could envy.

This victory by an amateur player in poker's most prestigious tournament is a nice counterpoint to the losses suffered by amateur investors in stocks during recent years. Gambling and investing, however, share some similarities beyond the use of the term "blue chips" to identify high-stakes poker and high-quality companies.

What most people consider investing is unfortunately just gambling; individuals buying stocks they don't understand in companies they don't know doesn't qualify as investing. On the flip side, what most poker professionals do for a living is, in a very real sense, investing: these pros have a positive expected return on the money they risk — an extraordinary expected return in fact for the top gamblers.

Playing with stocks does have an inherent advantage over playing with chips. At the poker table, the average player loses money; it's a "zero-sum game" wherein one player's profits must come from another's losses, and that's before the casino takes a generous cut. In the stock market, players buy pieces of ownership in companies and the value of these companies grows over time — therefore, the average stockholder should make money.

How much money stockholders earn is significantly reduced by Wall Street's piece of the action: the commissions for brokers, spreads for specialists and fees for investment bankers. Also shaving the expected return is the tendency of brokers to give greater priority to marketing initial public offerings (IPOs) than to stocks already trading in the market, for which commissions are about 90% less.

Among the similarities between Wall Street and Las Vegas, the most striking is the most basic: if you don't know who you are, these are bad places to try to find out. The therapy sessions are lousy and expensive — and regrettable, since you can do just fine in either world if you have some understanding of what you're doing and why.

Success in the stock market begins with a simple fact: you're investing in the long-term future of companies, and your timeframe should be measured in decades rather than months. Since you're putting up money now (to buy stock in a company) in return for a stream of money into the distant future (your share of the cash that company generates), it makes sense to have some sense of the company's cash flow. If this seems obvious to you, you're in the minority; unfortunately, most investors focus on a company's income statement — the profits as determined by sometimes-bizarre accounting rules — rather than its cash flow statement. As Donald Trump observed (some months before he nearly went bankrupt): "Cash is king".

Follow the advice of super-investor Warren Buffett and develop some familiarity with accounting since it's "the language of business". Most important, learn how to read Statements of Cash Flows in the annual reports and take the time to look at proxy statements. It's all very boring but the stakes are high enough to make it worth your while.

In searching for investments, don't think in terms of a stock market but rather of a "market of stocks". Among the thousands of public companies, focus on finding fifty great companies — those with a cost or product advantage over their competitors, where that advantage is sustainable.

Among these great companies, look for the occasional chances to buy their stocks at bargain prices. This is, however, easier said than done because of the "price-earnings multiple (P/E)".

If all stocks sold at the same P/E, you could just buy shares in the best company and you would get the best returns; unfortunately, great companies usually have much higher P/Es than good companies. For example, to buy stock in Coca-Cola, you currently have to pay twenty-four times the expected earnings for 2003; to buy shares of General Electric, the P/E is eighteen — Coke is the better company but is it the better stock?

This question highlights an interesting point: great poker players have an advantage over great investors. When a player like Doyle enters the World Series of Poker, he gets the same number of chips as everyone else at the table — in effect, his P/E is no higher than the lesser players around him. He might not win that day, but he has the odds in his favor and, if he plays enough, he'll come out far ahead.

Great investors, on the other hand, have to wait for the right opportunities, and best of these opportunities tend to come in the worst of circumstances. When the news is bad and the future is grim, when the Wall Street experts and television pundits are pessimistic, this is such stuff as investment dreams are made on. During these tempests, it's also encouraging to see executives buying shares in their own companies.

If nothing else, set aside a certain amount every six or twelve months to invest in the market, a strategy known as "dollar-cost averaging". This consistent approach will separate you from the temptation to put more money in stocks when they've moved up and less money when they've declined.

In order to make dollar-cost averaging work for you, stick with quality. The less involved you are, the more important to invest in companies to which you can give the benefit of the doubt in times of fear and uncertainty. It is at these times that you can make or lose a lot of money, and where you end up will often depend on the strength of your investments and the courage of your convictions. "A virtue which has not been tested in the fire is no virtue at all," said Mark Twain's Man that Corrupted Hadleyburg; in the stock market, emotions get tested and confidence is much easier to fake when you're holding the blue chips.

Pay attention as well to what the smartest investors are recommending. You'll do very nicely over time by listening to Warren Buffett & Charles Munger (Berkshire Hathaway), Bill Miller (Legg Mason Value Trust), John Neff (formerly of Vanguard's Windsor Fund), Peter Lynch (formerly of Fidelity's Magellan Fund) and most of the folks profiled in Outstanding Investor Digest (www.oid.com). But be cautious about taking advice wherever it's available: people in the investing business talk a good game and it's not easy to separate the gurus from the pretenders.

As a final point, don't be seduced by IPOs: the hot deals you read about — the ones which double in a day — are all but unavailable to the average investor. Those IPOs which are available tend to do poorly, which is why these stocks are said to be sold, not bought.

You can find a step-by-step tutorial on all this, free of charge, at www.wealtheffect.com/invest1.htm — start at the beginning and see how far you want to take it. If you learn enough to realize that you don't know enough, find an investment advisor who understands these concepts and has the long-term track record to prove it. There is a saying in the poker world that applies to the stock market: if you can't tell who the patsy is, you're the patsy.

To protect yourself further in both worlds, have a healthy respect for deception. In the stock market, steer clear of both the strangers who email or call with "can't miss investments" and the well-known executives who take shareholder money out the side door (through excessive compensation) or the back door (through phony accounting).

If you can read financial statements and you can read people, you're unlikely to be the patsy. At the risk of political incorrectness, here are some additional rules-of-thumb from twenty years analyzing stocks: don't buy shares in companies with CEOs who, in general, give you the willies (an investment term) or who, in particular, wear sunglasses indoors or pinky rings anywhere or eat enough to be plaintiffs in a fast-food class action. And if, in your analysis, there's even a hint of deception, take a pass and move along to the next idea.

In poker, deception is the rule rather than the exception. This is especially true in no-limit hold'em in which any player can bet any amount at any time — in this game, you play the player first and the cards second. For example, when holding a strong hand, should you act weak to disguise it or, because that's too obvious, should you act confident? But if that's what's expected, shouldn't you act weak after all?

Did your opponent raise out of weakness to steal the pot or out of strength to get more money on the table or to make you think this, or that? Why wasn't there a raise on the following card or why was there a re-raise when you made a play at the pot? If you come over the top with a re-raise of your own, will that do the trick or will it finish you off? (This guessing game was played for high stakes a century ago by no less than Sherlock Holmes in a confrontation with his favorite heads-up opponent, Prof. Moriarty.)

A good player can set the traps; a great player can sense them. This ability is what separates the elite players from the legions of wannabes. It is, as Addison DeWitt observed in All About Eve, an instinct to be cherished — and very few players have it.

One of these few is T.J. Cloutier, which is why he is considered among the best tournament players in the history of the game. Because of this ability, developed over five decades of competition, the longer he lasts in a tournament, the less likely you're going to beat him. According to T.J., when he gets into a zone, he can sense what card is coming, one reason he didn't seem surprised when his final opponent in the 2000 World Championship, Chris "Jesus" Ferguson, spiked a 9 on the last card, a 22-1 long shot.

Whether or not you believe in "seeing through the deck", you'd be a fool to think that you'll have much success bluffing a great player at the final table, given the many little ways you can betray yourself. "Now there are seventeen different things a guy can do when he lies to give him away," explained Vincenzo Coccotti in True Romance. "And if you know them like you know your own face, they beat lie detectors to hell."

Deception in high-stakes poker is more important than luck, and certainly more reliable. Oddly enough, luck is a good friend to great players (but don't expect them to be grateful). After all, without the element of chance, without the possibility that any starting hand can become a winner, the less-talented players wouldn't descend on tournaments such as the World Series of Poker, ready and willing to risk as much as $10,000 apiece to compete against the best in the world.

In purer games of skill such as chess or pool, the amateurs, gifted or not, recognize that their chances of beating the pros are effectively zero. And if they have trouble grasping the obvious, their inability to get past the first round of tournaments provides a helpful clue. Even in the side games played on park benches or in pool halls, the hustlers interested in rounding up opponents must accept handicaps designed to even the odds. The life of a pool shark is particularly difficult, marked by constant travel working a trade where success is often viewed as cheating.

In the world of poker, by contrast, the suckers make the journey on their own dime, eager to risk their cash against the professionals who reside in Las Vegas and the elite players who gather for the major tournaments, the biggest of which takes place each May at Binion's Horseshoe Casino. Whatever disadvantage these out-of-towners have in skill and experience is nobody's concern.

Luck is supposed to level the playing field, though its real role is to tempt the tourists. And if the tourists seem to catch more than their share of luck, that's precisely because they're more dependent on miracle cards. Better players tend to have the advantage with only a card or two remaining; bad hands are usually mucked early on for a small loss. Considering that most long-shot "bad beats" help the amateur and hurt the pro, it's easy to believe that luck favors the underdog. The better player, however, will get his share of luck — he's just less dependent on it.

In the 1997 Championship Event, the best player in the world needed a big helping of luck. After considering his options for nearly a minute, Stu Ungar decided to go "all-in", betting his entire stack; his one remaining opponent, casino executive John Strzemp took less than 5 seconds to call the bet. Down to the final card, Stu was a heavy underdog: of the remaining 46 cards, there were only 7 which would save him.

When the final card was turned up, giving him two-pair and his third world championship, Stu clapped his hands together and slowly separated them, as a magician might do. It was a gesture somewhat similar to that of Bill Clinton's as the departing leader of the free world neared the end of his homage-to-Spinal-Tap march toward the stage of the 2000 Democratic Convention.

This was the moment Clinton peaked, as he stepped into the light to accept the adulation of the party faithful — the networks on board, the economy not yet in recession, the presidential pardons not yet in mind. In later months, forced to retreat from midtown Manhattan to the relative safety of Harlem, he must have looked back on that moment and wondered how things went so terribly wrong.

All Clinton had to do was to take a pass on both Marc Rich and the White House furniture and he would have gotten away clean. What need was there for the short con, after all, when the status of ex-president is a meal ticket unlike any other? This was a personality — marked by good intentions, bad habits, childlike needs and grown-up issues — that would be warmly welcomed at any high-stakes poker game.

"A man who couldn't hold a hand in a first-class poker game is not fit to be President of the United States," said Richard Nixon's former professor (Dr. Albert Upton quoted in A. Alvarez's Poker: Bets, Bluffs, and Bad Beats). And yet Nixon, by far the best poker player among modern presidents, was unable to successfully bully or to bluff in dealing with Vietnam and with Watergate. In Vietnam, Nixon held obviously weak and easily read cards, and Hanoi had no intention of folding; in this country, where a president's hand is defined by his popularity, by 1974, Nixon found himself holding nothing.

A decade later, during the Iran-Contra scandal, the American public was not eager to force Ronald Reagan to show his hand. The implicit presidential threat — if you don't let me win, I'll lose my effectiveness and we'll all suffer — was strong enough.

George H.W. Bush played a straight-forward game, saying what he would do in Kuwait and — with the help of an awesome military force — doing what he said. He followed up with some trash-talking at the table and then refused to back it up, unforgivably tossing away an unbeatable hand. Bush's subsequent loss in the 1992 election wasn't due to his misplay, however, but rather to a wild third player joining in what's usually a heads-up contest.

His son has followed the tradition, showing every card in his hand, including some which weren't in the deck, and taking down most every pot. Bush understands that if you hold the best cards, you usually win — and the president almost always holds the best cards.

Presidents don't need to play their hands well as long as they don't alienate the folks watching the game from the rail; as at the Coliseum in ancient Rome, the public has the final say. In Las Vegas, however, the chips do the talking and the top pros would fly in from the four corners of the world to play high-stakes poker with Bill and George(s).

The best players combine a passion for the game with a dispassion for money, and that's a tough combination to beat. In high-stakes poker, the best way to win is to not fear losing — this is important in tournaments and essential in no-limit cash games, in which the losses taken are immediate and very real.

At the poker table, aggression pays off over time. Raises and re-raises provide a mathematical edge, what writer David Sklansky refers to as "the gap": opponents will fold a certain percentage of the time, giving you the pot regardless of what you're holding. By forcing the decision on the other fellow, you can win by raising with hands that wouldn't justify a call.

The power of the raise leads directly to the temptation of the bluff. All players bluff, most often by putting in the first bet, hoping to steal a pot that no one seems to want. Good players with bad cards will occasionally raise an opponent's bet, either to bluff a bluffer or to scare off someone with a strong hand but a weak heart.

Sometimes it takes more than one shot at the pot to win on a bluff: "Anyone can fire one shell into a pot," Stu Ungar told television commentator Mike Sexton, "but it's a mark of true greatness to fire two shells." Great players have a sense for when a second — or even a third — bluff will do the trick and for when it's better to shut down and take a manageable loss.

The great ones have the advantage of memory, according to Doyle, the ability to recall how various hands were played against the same opponents years or even decades earlier. Like a chess master facing a difficult decision, a great player remembers similar situations in determining how "to take the most successful route from there...[He has] the ability to do the right thing at the right time". He also knows when, as T.J. says, "to make the wrong move at the right time" — to make an ill-advised play, relying on the other player's ability to recognize, and to dismiss, the obvious.

Position is part of the calculation, as well; in hold'em, position is power. Unlike 7-card stud, the order of betting on each round is set and, as Mike Caro (the "Mad Genius of Poker" — his description, not mine) has pointed out, money at a poker table tends to move to the left. In fact, Doyle boasted in his classic book Super/System that if you gave him position, he could win without even looking at his cards.

The drama of no-limit hold'em is that any mistake can be your last, which allows for a textbook of mind games; at the higher levels, who you're playing is more important than what you're holding. This is why, for example, a top player will turn over a strong hand after an opponent folds, hoping to set up a successful bluff in the future, or will reveal a bluff, hoping to put an opponent "on tilt". There is a rhythm to the game and the elite pros can feel it — like the genius in Good Will Hunting, they can sit in a poker game and, despite the tricks and the tricksters, it's all just sensible.

The best player ever in deciphering the tricks, in Doyle's opinion, was Johnny Moss — and yet, in 1949, Mr. Moss lost a quarter-of-a-million dollars on a single hand when he re-raised Nick "The Greek" Dandolas, who had caught some lightning on his final card. This story defines the most important quality in high-stakes poker, and it's not luck and it's not intuition (with only three cards out of forty three available to save The Greek, the re-raise was essentially a foregone conclusion).

"Bad things are going to happen," Doyle said in talking about the game and the great old-timers who played it. "They were gamblers, they risked all their money all the time...they had a toughness that you get with adversity." After Johnny Moss lost $250,000 in real money (worth about $1.5 million in today's dollars), he went on to the next hand and the one after that, until he had taken down The Greek's entire bankroll.

Johnny Moss and the other great players from his era developed a sense of proportion that has faded in modern times. Most of the top old-timers looked down a gun barrel at least once in their lives, and for some it was the last thing they saw. They learned to take the lucky breaks without gloating and the bad beats without pouting; they understood that success in poker is defined by small advantages and big pots — 'having the best of it' as often as possible — and if the odds don't play out on any given hand, life goes on.

"For most of them, it was a way out of the slums," Doyle explained, "like basketball is for kids today." For road gamblers in the decades following World War II, quitting wasn't much of an option and complaining wasn't worth anyone's time. They made a life without any formal education and without ego — they didn't live by the modern mantra of "I'm smarter — I deserve to win", a concept which reads better than it plays in poker.

Even at their best, however, the old-timers would have their hands full with the current crop of elite players — the baby-boomers bring a mastery of strategy, tactics, percentages and money management to the game. In a tournament setting, in which each player pays an entry fee and competes until only one has all the chips (with prize money allocated to the top 10% of finishers), the modern professional is a force to be reckoned with. In a high-stakes cash game, however, the old-timers have an edge that can't be bought or easily learned, particularly when the game is no-limit hold'em.

Hold'em, usually played with ten players at a table, isn't difficult to learn. Since the casino always deals the cards, a "button" determines who gets to act last on each round of betting; after each hand, the button is moved to the left. The player to the left of the button is required to put in a half-bet — known as the small blind — and the next player over puts in a full bet — the big blind. This approach is more effective than each player tossing in a small ante, since the blinds give the two players in worst position the most incentive to play the hand.

Each player receives two cards face down and the first round of betting ensues. Three cards are then turned up — the flop — and a second round of betting follows. A fourth card is turned up — the turn — with more betting, then a fifth — the river — and a final round of betting among those still remaining. Each player is trying to create the best five-card hand from among the seven available (the two in hand and the five community cards dealt up).

The simplicity of the rules, in league with the prosperity-just-around-the-corner quality of luck, makes hold'em a seductive proposition. New players to the game can also equip themselves with an arsenal of advice and training aids (unfortunately for Bill Bennett, there's not much strategy to learn about video poker, except not to spill your drink on the screen). If you make some effort, you can become a good poker player relatively quickly by reading books such as the Championship series by Cloutier and McEvoy, by using software such as Wilson's Tournament Texas Hold'em, by watching the World Poker Tour on the Travel Channel and the World Series on ESPN, and by practicing with funny money on Internet sites such as Party Poker.

Becoming a very good player, however, takes time. You might need to suffer some hits before you understand why a call can be more dangerous than a raise, why holding top pair on the board can be a ticket to the poor house, why you should be more aggressive with a small pair than with a medium pair, why smart players are easier to fool than fools, why T.J. looks for bluffs from the button and the small blind, why Ace-Jack is better for a raise than a call, why in a high-limit game Doyle won't even play Ace-Queen (a great starting hand in most folks' minds) and why you're still a long, long way from being a great player.

Winning consistently in poker is harder than beating the stock market and not just because of the zero-sum-game argument mentioned earlier. To succeed with stocks, you need to add some art to the science; with poker, you need to add some science to the art — and at the end of the day, it's easier to learn a science than an art.

Great poker players, however, don't tend to make great investors. They don't have the necessary patience to succeed in the market and they usually don't leave themselves an adequate bankroll to ride out the inevitable volatility — their "margin of safety", which the legendary Benjamin Graham highlighted as a central principle of investing, is too narrow. The best players have no fear; the best investors have a checklist of concerns.

Poker stars also have a killer instinct that has less in common with successful investors than with successful executives. When asked what he would do if he saw a competitor drowning, Ray Kroc of McDonald's fame charmingly replied that he'd stick a garden hose down the fellow's throat. And that's the secret to making serious money: don't be a player, be a suit; don't try to beat the casino or the market, run a casino or a company.

"What I like about owning a casino is the risk," said an executive quoted in Beat the Dealer. "Some days we make money; other days we make more money." If you doubt this, just fly into Vegas at night, and watch a city on the edge of forever — an ocean of lights created by casino revenues — appear out of the desert.

Over in Corporate America, the equation is similar: investors might win or lose but CEOs get rich. If you doubt this, read through some proxy statements (in which companies are required to reveal the compensation packages for their senior executives). "These otherwise decent people simply followed the career path of Mae West," wrote Warren Buffett. "'I was Snow White but I drifted.'"

Corporate executives might have wealth and power and just about everything else but doesn't all that get boring after a while? Bill Gates can play low-stakes poker on the Vegas Strip but at the cool-kids' table Stuey Ungar is betting $220,000 on a stone-cold bluff, on his way to a third world championship.

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