Investment vs Gambling Framework

A framework for distinguishing between strategic investing and emotional gambling during market downturns, based on Shaan Puri's experience as both an investor and former poker player.

Mental Framework for Market Downturns

• Don't obsess over daily fluctuations

  • Avoid checking portfolio values constantly
  • Daily changes don't matter if you're not actively trading
  • Looking at losses creates unnecessary mental stress

• Focus on fundamental beliefs

  • Ask yourself: "Has anything changed about my investment thesis?"
  • Evaluate if you still believe in 5-10 year outlook
  • If core thesis hasn't changed, no action needed

Distinguishing Investment from Gambling

• Key signs of gambling behavior:

  • Chasing losses
  • Trying to "win back" lost money
  • Making emotional decisions
  • Acting from a place of "tilt"

• Signs of proper investing:

  • Making calculated "buy the dip" decisions
  • Maintaining emotional distance
  • Sticking to original investment thesis
  • Taking time to assess before acting

Healthy Market Response

• Increase focus on active income

  • Don't rely solely on investment returns
  • Pursue business opportunities and cash-generating activities
  • Submit invoices and collect payments promptly
  • Stay productive regardless of market conditions

• Maintain perspective

  • Avoid getting lazy during bull markets
  • Don't let paper gains reduce work ethic
  • Remember markets are cyclical
  • Keep cash reserves for opportunities