Photo: Business Insider
Poker’s rise to prominence in the world of finance has pushed bridge, its more mature predecessor, from the limelight.There’s a reason, however, why the best bridge players in the country are almost all investors. Business Insider deputy editor and bridge enthusiast Gus Lubin notes: “Bridge is a complex card game that fits the analytic side of finance, as poker appeals to instincts.”
A bridge devotee, Warren Buffett has famously declared, “I wouldn’t mind going to jail if I had three cellmates who played bridge.” But passion for the game has gotten some on Wall Street in trouble. As recounted in William D. Cohan’s House of Cards, Jimmy Cayne played a tournament of bridge while Bear Sterns imploded, an example of antipathy at the executive level that is often compared to Nero playing the fiddle while Rome burned.
Though an intense mental activity, bridge also offers an opportunity to unwind for high-octane individuals. A 1955 issue of Sports Illustrated references Eisenhower’s love for the game which was his “only effective form of relaxation…The most relaxing thing he could do was to play a game in which the problems were tough, the solutions difficult, but the consequences of error were just a few hundred harmless points written down on a scorepad.”
There’s no doubt why investors still flock to this challenging test of teamwork, memory, and wits. Bridge can help your intelligence, your health, and your career — and it’s fun.
Due to the sheer number of rules and complexity involved with bidding, which precedes a hand of bridge, it can be a very difficult game to pick up. The challenge of mastering bridge is a compelling end in and of itself for those with competitive spirits and analytical minds.
There's no doubt that Wall Streeters enjoy the mental stimulation that accompanies a game of bridge. Warren Buffett once said that bridge has 'got to be the best intellectual exercise out there.'
As the following quote shows, you never know who you might meet at a game of bridge:
'One of the reasons I'm here is because of the camaraderie,' said a loud and gregarious Philip Krone, a political and urban consultant in Chicago. 'What other place are you going to get to play with the chairman of a Fortune 500 company, the counsel general of a major European power, or even a businessman from Shanghai on his way through?'
Source: Chicago Tribune
Buffett has elaborated on the similarities between the two pursuits:
'The approach and strategies are very similar in that you gather all the information you can and then keep adding to that base of information as things develop. You do whatever the probabilities indicated based on the knowledge that you have at that time, but you are always willing to modify your behaviour or your approach as you get new information. In bridge, you behave in a way that gets the best from your partner. And in business, you behave in the way that gets the best from your managers and your employees.'
Source: Buffett Cup
As long as your mind is keen, you can continue to play bridge, at any level, regardless of your age. The same can't be said for sports like golf, in which you're dependent on weather and the longevity of your joints.
A study released by the College of Medicine of Yeshiva University found 'Playing chess, bridge or a musical instrument significantly lowers the risk of developing Alzheimer's disease or other forms of dementia, according to the most comprehensive study to examine the benefits of challenging intellectual activity among the elderly.'
Source: Washington Post
Hedge funds know this truth best of all -- it's possible for them to lose money, yet still outperform the market at large. In bridge, a team can lose a few hands and still win the game.
Despite the efforts of many club officials, competitive bridge clubs are dominated by men:
But in business parlance, bridge has suffered from a severe image problem and a lack of consumer loyalty...The Vanderbilt Bridge Club, in fact, counts only one female player among the more than 40 participants in its Monday games. Lamenting the predominantly 'male atmosphere,' Frost said he hopes to change that demographic.
Source: Chicago Tribune
A University of California study found that 'playing contract bridge leaves people with higher numbers of immune cells... Bridge players plan ahead, they use working memory, they deal with sequencing, initiation and numerous other higher order functions with which the dorsolateral cortex is involved.'
Source: University of California, Berkeley
From the NYT:
'If one could arrange a team championship in which squads were organised by occupation, it is likely that the options traders would win: trading is a game in which the player must study patterns and make accurate decisions quickly.'
Because bridge is a team game, there is always the possibility of using hand positioning, code words, or other systems to convey information about your cards to your partner. That's not something you can pull off in chess or checkers.
Undoubtedly, derivative trading is incredibly complex -- in fact, so complex that at times it may be unfeasible to verify that it has been properly constructed. Likewise, there are over 100 bidding systems referenced in this 'incomplete' list, which demonstrates that bridge, like derivatives trading, offers an infinite number of ways to go about your business.
Thomas Weik, CIO of Weik Investment Services, explains this parallel clearly:
'In bridge, there are various safety plays that one can take to protect against adversities in a suit or entire hand. Safety, to me, is an extremely important concept in investing and in bridge and has been a major contributor to any success I have had. You decide I'm going to change my line of play here. The difference in bridge is that you can actually plan the play of a hand from start to finish.'
Source: Reading Eagle
In the American Contract Bridge League, the top honorific title goes by this auspicious name. In order to become a Grand Life Master, 'a player must have earned 10,000 masterpoints and have won at least one North American Bridge Championship event that has no upper masterpoint limit or its equivalent.'
In duplicate bridge, where many tables play the same hands, you're not focused on winning individual hands -- which is equivalent to tracking the market. Instead you're trying to squeeze more points out of each hand than everyone else in the room -- aka, basically, to generate alpha.
It's no surprise what kind of teams have put up incredible numbers in the IMP scoring system:
It takes a net gain of 4,000 total points to earn the 24-Imp maximum on the scale, and this is hardly ever achieved. A team came close on the diagrammed deal, played last fall in a Regional Swiss Team Championship in Swan Lake N.Y., and in a sense exceeded it. The players were Eileen Brenner, Michael Pickert, Jim Krekorian and Steve Weinstein, who are a team away from the bridge table also - trading options as a group on the American Stock Exchange.