The Poker Face of Wall Street

Brown, a risk manager who has worked at Morgan Stanley, Citigroup and AQR and who played poker semi-professionally, argues that poker and financial markets are the same activity studied under different names. Both allocate risk among people with different information, different tolerance for loss and different reads of each other.

The historical sections make a specific claim: that gambling and finance in America grew together rather than separately. Brown traces card play among frontier traders, the role of betting in early commodity and securities markets, the overlap between bucket shops and gambling houses, and the personnel who moved between the two. He argues that the legal distinction between a wager and a financial contract has always been drawn for political reasons rather than economic ones.

The practical sections concern risk-taking behaviour. Brown discusses bankroll management, the difference between edge and variance, why good players fold most hands, why the money in poker comes from opponents' errors rather than from cards, and how these map onto trading. He is direct that most people who think they are investing are gambling badly, and that most people who think they are gambling are taking better-analysed risks than the investors.

The book is idiosyncratic and digressive, mixing memoir, history and technical material without a clear structure, which some readers find frustrating. The poker material predates the online poker boom and the solver era, which changed how the game is played and analysed. The historical claims are interesting but lightly sourced compared with academic financial history.