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Successful investing isn’t about predicting the future—it’s about making better decisions when the future is uncertain.
In this episode, Dave Wolcott sits down with former World Series of Poker champion, bestselling author, and decision-making expert Annie Duke to explore how investors, entrepreneurs, and business leaders can improve their judgment, embrace uncertainty, and avoid the cognitive biases that often lead to costly financial mistakes.
In This Episode
- How embracing uncertainty leads to better investment and business decisions
- Why cognitive biases and emotions often cause investors to make poor financial choices
- How creating decision frameworks and guardrails improves long-term wealth outcomes
Annie Duke is a former World Series of Poker champion, bestselling author of Thinking in Bets, Quit, and How to Decide, and one of the world’s leading experts on decision-making under uncertainty. Drawing on her background in cognitive psychology and professional poker, she advises investors, executives, and organizations on improving judgment, managing risk, and making higher-quality decisions.
Annie explains why successful investors should focus on the quality of their decisions rather than short-term outcomes, recognizing that luck and uncertainty are always part of investing. She also shares practical tools—including mental time travel, stop-loss rules, and structured decision guardrails—to help investors avoid emotional reactions, continuously update their beliefs as new information emerges, and make more rational long-term investment decisions.
This episode covers wealth strategy, decision-making, investing under uncertainty, risk management, behavioral finance, cognitive biases, alternative investments, portfolio management, investment policy statements, financial freedom, accredited investors, and long-term wealth building.
I think that you should always be aware that there’s uncertainty, that there’s volatility, and that no matter how quiet things seem, if you look historically, you’re obviously taking on risk. One way to understand that you’re taking on risk is that if you weren’t taking on any risk, you’d be making $0.
How’s it going, everyone? Welcome to another episode of Wealth Strategy Secrets of the Ultra Wealthy. When it comes to building wealth, making investments, or leading a business, most people focus on outcomes. But the reality is great outcomes often come from something deeper: great decision-making. That’s why I’m excited to welcome Annie Duke to the show. Annie is a former World Series of Poker champion, bestselling author of Thinking in Bets and Quit, and one of the world’s leading experts on decision-making under uncertainty. What makes Annie’s work so powerful is that it goes far beyond poker. She helps investors, executives, and entrepreneurs understand how to think more clearly, manage risk more intelligently, and make higher-quality decisions even when outcomes are uncertain, because the truth is, life and investing rarely offer certainty.
The people who win long-term aren’t necessarily the ones who predict perfectly — they’re the ones who learn how to think better. If you want to sharpen your judgment, improve how you evaluate risk, and become a more intentional decision-maker, this conversation is going to be incredibly valuable. Annie, welcome to the show.
Well, thank you for having me. I’m excited to be here.
It’s a pleasure to have you on the show today, and I’m looking forward to the discussion. I think the audience is going to be surprised — they’re going to learn some things that are quite unique when it comes to decision-making, investing, and a lot of other things in life, where we’re making very important decisions but can often be challenged by our biases around belief systems, where we’re from, the people we spend time with, and everything else. I think it’s going to be interesting to decode how you look at this from a psychological and neurological standpoint: how people make decisions, where they can go wrong, where they can go right, and how they can optimize their decision-making. That all started for you with poker. So tell us how you got into poker and how your journey started.
My journey actually starts a few years before I started playing poker. Right after college, I started a PhD program at the University of Pennsylvania in cognitive psychology — thinking about how we make sense of the world, how we make decisions, how learning happens, how we create models of the world. There’s a world that exists outside of us, but the way we make sense of it happens in our brains. So the question is: how does that occur? I studied that for five years at Penn.
During that time — and actually while I was in college — my brother was pursuing a very different path as a professional poker player. He’d gone to New York City to study chess. After getting into college, he decided to defer for a year to study with a grandmaster, since his goal was to become a grandmaster himself.
He was quite a good chess player — that was when he was 18. Then he started playing other games. He was in New York, which had a very active game scene, and if you played chess, you tended to get exposed to backgammon, gin rummy, and poker. He started playing poker and loved it. By the time he was 23, he’d made it to the final table of the World Series of Poker Main Event, and at the time he was the youngest person to ever do that (there are younger players now who’ve since done it).
This was all happening while I was in college and then in graduate school, so I actually knew quite a bit about poker from watching him play. He’d talk to me about it when I sat behind him, and I’d ask him questions. Then, once I was in graduate school, he — being a generous older brother — started flying me out once a year for part of the World Series of Poker. He was playing in New York but would go to Vegas for the World Series. He’d fly me out for a week’s vacation, which was amazing, since as a grad student I couldn’t afford a vacation on my own. While he did his thing, I didn’t really have anyone to hang out with, so he staked me — gave me some money to play in small-stakes games, figuring I probably knew more about poker than the people playing at those limits. So once a year, I’d go out and try my hand at what I’d absorbed from him.
By the end of graduate school, I’d finished my dissertation work and was going to go on the job market to become a professor. But I’d been struggling with a chronic illness that became pretty acute, and I had to take a leave from graduate school. During that time I needed money, and my brother said, “You’ve been watching me play for a long time, and every year you come out and play during the World Series and do pretty well” — I usually made money doing that — “why don’t you try doing that until you feel better and can go back to graduate school and the job market?” So I did, and, as I like to joke, what was supposed to be the meantime turned into an 18-year career.
Wow, that’s quite a journey. Plenty of people have played poker as kids or with family, just for fun, but taking it to that level is exceptional. What did you learn from all of that? And tell us a bit about your background in psychology, and when that started to interface with your poker playing to help you optimize your game.
I’d been thinking a lot about learning and judgment and decision-making in graduate school, and then I started playing poker, which is a game of decision-making under uncertainty — very similar to what I’d been studying. You can think of two different types of uncertainty in poker. The first is obvious: it’s a card game, so there’s a big influence of luck. The shuffle randomizes the deck, so there’s a lot of luck in the short run as to which cards you’ll hit. You have no control over the next card. You could make an amazing decision that wins 96% of the time, and by definition, 4% of the time you won’t win. You don’t know if this particular hand is that 4% or not — you just know that if you play it 100 times, you’ll win 96 of them.
That doesn’t mean you’ll win this time, or that you can predict you’ll lose this time — that’s determined by luck. That causes a lot of problems, particularly in figuring out why something happened, because if you win or lose a hand, you have to figure out what was the influence of luck versus the influence of your decision-making.
If you attribute something to luck that was actually due to your decision-making, you’ll learn the wrong lesson from it. And if you attribute something to your decision-making when it was actually luck, you’ll also learn the wrong lesson. Think about investing in a stock and making money, but the decision to invest was actually poor — say someone you met on a boat recommended it, you did no due diligence, bought it, and won. I’d say that’s due to luck, not your decision-making. But if you think it was good decision-making, you’ll conclude that taking tips from random people is a good process, and you’ll keep doing it, hoping it works out. Likewise, you can do a lot of due diligence and run a very good investment process, but there’s a lot of luck in how things turn out in a market — you can do everything right and still lose money. If you attribute that to your process rather than a downturn in the market, you might end up changing a process that was actually good.
So this is a problem far beyond poker — it’s a life problem, this influence of luck. The other problem in poker, besides luck, is that we know very little compared to all there is to know. I know my own cards, but not yours, and not anyone else’s at the table. If I knew your cards, it’d be a lot easier to figure out whether I had the best hand. But I don’t, so I have to think about what I know about you and how you’ve played in the past, then map your actions — whether you call or raise — onto what I think you’re holding. What separates a great player from a merely good one, or an amateur, is their ability to narrow down what their opponent is holding.
The better I get at predicting what you’re likely holding and what you’re going to do with it, the better I can navigate the hand. But this still makes it hard to know afterward whether I made a good decision — did I get close to what you were actually holding? And here’s something people don’t often know about poker: most hands actually end without either player seeing the other’s cards. We tend to think the cards always get revealed at the end, but that’s not true for most hands. At a professional level, only about 11% of hands end with cards face up. So you’re left in a cloud of uncertainty — and even when I could see your cards at the end, I don’t see them while I’m actually making the decisions.
This relates directly to decisions in life. How many times have you made a decision, started down a path, and then learned something new afterward and thought, “If I’d known that at the time, I would have decided differently”? That’s the influence of hidden information. You’re not omniscient — you know very little of everything there is to know, and that makes decision-making hard, whether it’s a hand of poker, an investment, or hiring someone into your organization. You don’t know everything about that person. You don’t know for sure whether they’re a good fit, or how much to trust the recommendations you’ve heard. It all makes decision-making difficult.
So I was playing poker and I understood those things about the game, but it wasn’t until about eight years into my career that I started explicitly connecting it back to what I’d studied in graduate school — the difficulties of learning and making high-quality decisions in uncertain environments. That happened by accident, through pure luck: someone decided to put poker on television in 2002. I never would have guessed people would want to watch it, but I would have been wrong — people really liked watching poker on TV.
By 2002 I was already a fairly well-known player, and I was unusual in that very few women played, and I was a mother of four. That made for a good story, so I got a lot of coverage. Organizations started asking me to speak about how poker might inform their decision-making, and that’s when I really realized there wasn’t much difference between what I’d studied as an academic and what I was doing as a poker player. Poker was just a more high-stakes, fast-paced, practical version of the same decision-making problem I’d been thinking about through thought experiments and lab research in graduate school. That’s when I started thinking seriously about how science could inform how you play poker — and, more importantly, how poker could inform how we think about human decision-making and judgment.
That’s fascinating. Let’s dig into the psychology and science of that — how did it improve your game, and how can we apply it to make better decisions?
There are two main ways poker teaches us to become better decision-makers. Both show up in the science, but poker really puts them in your face — because unlike in laboratory science, if you don’t figure these things out in poker, you go broke. There’s a strong feedback loop telling you what you need to do to get better.
The first is: lean into and embrace the uncertainty. I once did an episode of Radiolab, and they asked how poker players become certain — how they build certainty around what their opponent has and what they should do in a given hand. I was honestly confused by the question, because poker players don’t build certainty — they embrace uncertainty. You’re never certain what card is coming next. I can tell you the probability of a card hitting, but that’s not knowing what’s coming — just knowing the odds.
That’s what embracing uncertainty means: understanding there’s variance, and playing the hand for the range of possibilities rather than for false certainty. The same goes for not knowing for sure what your opponent has — you’re making your best guess. By truly leaning into that, you avoid getting stuck on one conclusion. A lot of people think they know more than they do — they’re far more certain than they should be about what their opponent is holding or about to do — and they get stuck in that belief and won’t change their mind.
Beliefs, once formed, are very sticky. We’re very certain of them, very sure we’re right, and very bad at updating them. When you embrace uncertainty and hold your ideas loosely — treating them as your best guess for now — you become a better updater, more willing to change your mind. You need that in poker, because you’re constantly getting new information as the hand unfolds: is your opponent raising or calling, how much, do they look nervous or not? All of that has to feed into a constantly updated view of what they might be holding. If you get stuck on your first read, you’ll miss the signals that should be changing your mind — including the new cards that come as the hand progresses. You don’t want to charge ahead with a strategic line if a new card changes things for you.
So the goal is to have an accurate view of your own state of knowledge, rather than overselling your own certainty. That’s conceptually important, because it makes you much better at updating your beliefs given new evidence, which makes your forecasts more accurate. That’s the first big bucket, and it’s one of the biggest problems people have as decision-makers: overconfidence. Confirmation bias causes people to interpret information in ways that confirm what they already believe, rather than updating their beliefs in the direction the evidence actually points. We think we have far more control over future events than we do, and there’s a whole set of biases tied to this excess certainty and unwillingness to update.
That’s something you really learn at the poker table. The second thing you learn is that you have to put rules in place to stop yourself from making mistakes, because the errors in human judgment are built into how our brains process the world. Just knowing about confirmation bias, for example, isn’t enough to stop you from falling into it — you need processes and guardrails to mitigate those tendencies.
Here’s a simple example: when I played poker, I had a stop-loss. What that meant depended on the size and stakes of the game I was playing, since the stop-loss was tied to those stakes. When I first started, playing $10/$20 limit poker, a reasonable buy-in for that game was around $600. So I had a rule: once I lost $600, I was done — I wasn’t buying back in.
That’s not actually a very rational rule on its face. If the game is good and I’d be a favorite to win, I should stay regardless of whether I’ve lost $600. And if I’m up $600 but the game is bad and I’m not actually favored to win, I shouldn’t stay either. So a strict stop-loss is somewhat irrational — except it’s less irrational than the alternative. Going back to confirmation bias and how we think about luck: the science is clear that once you’re in the losses — in this case, down $600 on paper — there are strong forces pulling you to stay in the game rather than rationally assess whether you’re losing due to bad luck or bad play. Your brain is bad at that once you’re down. Instead it tells you, “I can’t quit now, I need to get my money back.” You end up rationalizing that you’re just unlucky, that the other players are actually bad, cherry-picking the hands where you got unlucky as confirming evidence to keep playing — and you won’t quit.
[Sponsor message: If you’ve ever wondered how the wealthy use energy investments to reduce their tax bill while generating cash flow, go to pantheoninvest.com/energy to find out.]I knew that continuing to play in a game where I was actually playing poorly was a much worse mistake than whatever error I might make by sticking to my stop-loss. So the whole time I played poker, I kept a stop-loss to mitigate those malign forces that would otherwise keep me in the game. You see the same issue everywhere: people hold on to stocks they’re losing on that they wouldn’t buy today. People stay in jobs far longer than they should, because leaving feels like a loss, even though they’re unhappy and wouldn’t take that job today. They won’t abandon projects they’ve started, even though they’d never start that project today. They stay in relationships that make them unhappy, relationships they wouldn’t begin today.
You hear people say, “I’ve put so much time into it, I don’t want to have wasted that time” — which is really the same as a poker player saying, “I’ve lost all this money, I want to get it back.” That’s the sunk cost fallacy. When it came to poker, I had a whole set of rules like that — guardrails to mitigate the cognitive biases I knew I was prone to.
I love those insights, and I see such a parallel to the investment world — there’s so much uncertainty out there. It could be geopolitical events, market dynamics, leadership changes at a company, even your own liquidity at the moment you’re making investment decisions. I really like what you said about leaning into uncertainty, because in reality, uncertainty is the only real constant — and if we can accept that as a baseline, we can make better decisions.
When you understand uncertainty as your baseline, you make better decisions.
What that translates to for me: I was taught the traditional way to invest, like most people are — stocks, bonds, mutual funds, invest for the long term. But at the end of the day, that’s what Wall Street wants you to do — it’s a massive marketing machine creating those beliefs. When I started investing in alternative assets and real estate and told my family and friends, they said that was risky, or that a financial planner would think it was a bad idea. It creates a false sense of certainty in that traditional model, and biases against new information and new decisions. A lot of people can’t even get out of the gate because they can’t entertain new data that might change how they should decide.
I have a few thoughts on that. First, entertaining the idea that there might be value elsewhere is obviously important — and so is understanding what you actually know versus what you don’t, which I think we’re pretty bad at. If you have no time to put into research, you need to park your money somewhere, and you don’t want a savings account paying under 1%. Historically, a passive investment strategy has done far better than putting your money under the mattress.
Plenty of people put real work into more active strategies. As long as you’re either doing the work yourself to understand what you’re investing in, or trusting an expert — say, through a REIT or an index — who has the informational edge, that’s fine. But there’s still risk in the market even with a passive strategy. I know that for certain — I lived through 2008. There are times when that risk gets fully exposed. A lot of what happens to people is that in quieter times, they start to think it’ll always be that way — they lose sight of the fact that the risk never went anywhere. You should always be aware of that.
You should always be aware that there’s uncertainty, volatility, and that no matter how quiet things have seemed, historically you’re taking on risk. One way to understand that you’re taking on risk is that if you weren’t, you’d be making $0. It’s that simple. So I think the key thing about seeing risk clearly is that when we invest, we should think of ourselves more as innovators. If you think about someone starting a company, they know they’re doing something that hasn’t been done before, and they’re well aware of the risk. Because they’ve chosen that path, they have to embrace the uncertainty and be comfortable making decisions under those conditions, because they understand they’re innovating.
Along with that, they know they’re taking on risk and that they’ll learn new things after they start, because they’re doing something new — maybe creating a product nobody’s made before. There was a time when Apple was a startup, and no one knew if people would want what they were selling. They had an idea and tried it. That’s one way to think about innovation.
But there’s another way, which I think is important: sometimes the environment itself is uncertain. There are times when things are more stable than average, and times when they’re less stable. There are times when something new is driving market forces that hasn’t settled in yet the way established things have. Think about 1999–2000, when e-commerce and the dot-com boom were emerging — that made any investment decision inherently more “innovative,” because there was a new force driving the market that we didn’t understand the way we understood, say, brick-and-mortar retail.
Today we have two big things happening: geopolitical uncertainty, and AI — how much AI is driving what’s happening in the market. Both are genuinely uncertain; we don’t know where AI is going to land, or what these companies’ valuations will ultimately settle at, the way we understand more mature parts of the market. That creates a lot of uncertainty too. There are times when the uncertainty is dialed up, and times when it feels like there’s none — but we should always be thinking like innovators, because a few years ago AI wasn’t a factor in the market, and now it is. That uncertainty was always there; there was always the possibility that something disruptive would appear. If you behave as though nothing will ever be disruptive, you could be in trouble.
We want to take a lesson from people starting companies and creating new products — the same lesson poker players learn: things might change, and they might change fast, so you should already be thinking about your plan for that. When you mention liquidity, it’s important to understand the relationship between liquidity and uncertainty: the higher the uncertainty, the more liquidity you want, because liquidity is what lets you change your mind.
That’s why embracing uncertainty matters so much — it means planning ahead for “what if things change? What would I do? How would I react? How might I change what I’m investing in?” And if you’re in something illiquid, is there a way to hedge that — a position that would neutralize the exposure even if you can’t get liquid in that one thing? Maybe by investing elsewhere if the market changes drastically. It just means planning ahead for changing your mind. That’s an important concept for anyone deciding within uncertain systems — which, by the way, isn’t just the market. It’s basically everything, but the market is a good metaphor for thinking through any other decision you might face.
The act of planning ahead is what protects you when emotions take over.
100%. I think that’s such a great takeaway — a lesson in how you balance certainty, uncertainty, and risk, and what your expectations should be. Going back to what you said about the stop-loss: it made me think about financial plans, which are essentially a model for retirement. We run a virtual family office, and inside it, we work with clients to create what we call an investment policy statement — essentially a financial constitution. It’s comprehensive: not just a model for income goals, but your legacy plan, tax strategy, liquidity management, risk management — and, as you said, guardrails to protect yourself from yourself. Take crypto, for example — there are so many crypto bulls out there who just love it, and that might be great, but you could also say, “I’m never going to put more than 10% into any one asset class, no matter how strongly I feel about it,” as an overarching philosophy. I think it’s a great opportunity to build guardrails into your investment process — or really into any decision process in life, whether relationships or business.
I think crypto is actually a great example of everything we’ve discussed. It’s not as new now, but at the time it was genuinely new, and the chances of learning something new after the fact were much higher. So you had to put a premium on liquidity and understand there’d naturally be more volatility in a decision like that, no matter how bullish you felt. You have to ask: what percentage of my wealth am I willing to put into something with fatter tails and a greater risk of ruin?
There’s an interesting wrinkle in the crypto story, too. Early on, when I asked some early crypto investors why they were so bullish, one common theme — this was pre-pandemic — was that they believed crypto would be decorrelated from the broader market: if the market went down, crypto wouldn’t necessarily go down with it, because of the type of financial instrument it was. There are reasons that could happen by accident, but their actual claim was that whatever forces move crypto would be uncorrelated with the forces that move the market. I wasn’t willing to dig in and verify whether that claim was true — I’m just saying it’s what people claimed.
So when someone says, “I don’t want to put more than 10% of my assets in crypto,” part of that logic may come from believing it’s not correlated with the rest of your portfolio. You don’t have a real portfolio if everything in it is correlated — you might as well hold one investment. That’s basic portfolio theory. So whatever slot crypto occupies, you’d manage it differently depending on whether you believe it’s correlated with the market.
Then the pandemic hit, and as far as I know — though I haven’t dug deeper — crypto crashed along with the market. I’m not claiming those things are definitely correlated, since there could be entirely different drivers at play, but from where I sat, it looked like an interesting bit of evidence that crypto moved almost in lockstep with the market. I always wondered — though I never actually asked — whether the people who’d told me crypto was a hedge ever updated their belief and their strategy after that.
I don’t know if they did, and I’m not telling anyone crypto is definitely correlated with the market — I haven’t researched it myself. But I remember thinking in 2020, “I wonder if that changed things for them.” Crypto is a new asset class, and you’re going to make predictions about how it behaves relative to other assets you own — you have to actually track those predictions. In a more sophisticated version of a stop-loss, it’s good to say in advance: “If I see this happen, I will revisit my position in this way. I’ll change my allocation. I’ll change how much risk I’m taking.” If you were bullish on crypto because you thought it would hedge the market, and then it crashed alongside the market, I’d hope you revisited that belief. I don’t know what conclusion you’d have reached, since I never went back to check, but I’d hope you had a plan in place and reduced your position when the evidence came in. My guess is most people didn’t, because people come up with all sorts of rationalizations to avoid doing that. But I’d hope you did — and that’s a really important part of the decision process. It means accepting the uncertainty from the very beginning.
Really great insights, Annie. If you could give one piece of advice to the audience about making better decisions in their wealth strategy or life strategy, what would it be?
You’re making me pick just one! I’d say: get really good at what I’d call mental time travel. There’s this unique thing about humans — we can think about the future, even far past the point where we won’t be here anymore. That’s an incredibly powerful tool for making better decisions, because in the moment — when the market crashes and you’re watching your net worth drop — you’re going to be a very poor decision-maker. There’s a lot of emotion involved, and that’s when cognitive biases like sunk cost, bandwagoning, or panic are at their strongest: refusing to sell something you should sell because you’re already down, or panic-selling everything when you shouldn’t. We’re just bad in those moments.
The way I try to get people to think about it: if you want to eat healthy and there’s a delicious cupcake sitting in front of you, you’re not going to be good at resisting it in that moment. We’re not very good in the moment — but we are good at projecting ourselves into some point in the future and thinking, “What if this happened? What would I do?” So I love having people imagine: “It’s a year from now, and the market has dropped 10%. What am I going to do about that?” Actually make a plan — think through what could be causing that, and what you’d do in response. Write it down.
You can take it further: imagine it’s a year from now, the market’s dropped 10%, and looking back, there were early signals you ignored. What were they? We all ignore signals — so write down what you’d do if you saw them, and make an agreement with another person to hold you to it. Having someone to work through these plans with you is incredibly valuable. The act of thinking it through, writing it down, and committing to another person will really increase the odds that you won’t “eat the cupcake” when you know it’s bad for the future version of yourself that you’re trying to build.
When you’re thinking about what you want for your retirement, or what you want to pass down to your children, you have a goal for some future version of yourself, and you want the present version of you to act in service of that goal. We’re actually pretty bad at that — which is why mental time travel matters: cast yourself into the future, imagine what you’ll do if certain signals show up. That’s the one thing I’d ask everyone to do to improve their decision-making.
Fantastic, Annie — really appreciate your time and insights. This was a thought-provoking discussion that I think will help people make better decisions, not just in their investment portfolios but in life, living more intentionally and meaningfully. I know you have a training course coming up, and a book as well — would you like to share details for anyone who wants to learn more?
People can go to anniduke.com to learn more about me — you’ll find my books there. I’d recommend three: Thinking in Bets, How to Decide, and Quit: The Power of Knowing When to Walk Away. I think they’re all really helpful, but for investors in particular, Quit is especially relevant, since it covers what we just discussed — how to get better at planning for future changes so you don’t get stuck in a strategy or decision you made in the past for reasons that no longer apply. I’d recommend that as the main read.
I also teach a class on a platform called Maven. My next class launches in October and runs over three weeks — two sessions a week plus an office hour. My past students seem to really enjoy it; I think this next one is cohort 12. It’s cohort-based, with lots of breakout discussions, so you get to know the other students, and there’s even an ongoing alumni group of past students who continue working on becoming better decision-makers long after the class ends. I run it two or three times a year, and the next one is in October.
Awesome — we’ll make sure to include all of that in the show notes. Annie, really appreciate your wisdom and your time today. Super insightful — I could probably spend an entire afternoon workshopping all of this. I know we’re just scratching the surface, so I look forward to digging in more. Thanks again, and I look forward to continuing the discussion.
Thank you so much.
Thanks for listening to this episode of Wealth Strategy Secrets. If you’d like a free copy of the book, go to holisticwealthstrategy.com. If you’d like to learn more about upcoming opportunities at Pantheon, visit pantheoninvest.com.