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By Vedran Vuk, Casey’s Research

Last week, I ran into an interesting headline: Poker Champ Phil Ivey Waiting for $11.7 Million Payout. For those readers unfamiliar with professional poker, Phil Ivey is one of the world’s best players, with eight World Series of Poker championship bracelets, $5.9 million in tournament winnings, and nearly twice those earnings outside official tournaments. Here’s a summary of the big story in the article: Phil Ivey was playing punto banco (a variant of baccarat) at a London casino. He sat down with $1.6 million and finished with $11.7 million. However, the casino is not giving him his winnings and is instead investigating his play.

Sure, this is quite a predicament. However, I didn’t find the grand total of winnings nor the casino’s reluctance to pay to be the most interesting part of the story. Here’s what gets me: one of the world’s greatest poker players sat down with nearly $2 million dollars to gamble in a game of chance.

Of course, poker itself has elements of luck, but if you know the probabilities, have lots of experience, and can read the other players, the odds are in your favor. Punto banco, on the other hand, is quite literally a game of chance. Doesn’t this seem just a little crazy? Phil Ivey could sit at almost any poker table with a near-guarantee of a return. Instead, he’s toying with his fortune over the next card in baccarat.

This isn’t unique to Phil Ivey. Doyle Brunson, a poker legend, admitted to similar failings. Brunson once wrote that he would be a much richer man today were it not for betting on things other than poker. Although he was one of the best players ever, he lost piles of his poker winnings in other games of chance.

Though the poker fans among our readers might enjoy this article, why does this matter to the rest of us? As investors, many of us have the exact same problem as Phil Ivey and Doyle Brunson. We know there are investments in our portfolios where the odds are in our favor. We’ve done the research or at least have a strong understanding of someone else’s research on the topic, yet nonetheless, we end up basically gambling with a part of our portfolio. Perhaps it’s a hunch on the market’s direction or a hot new company on the financial news. Based on little more than intuition, we put these things in our portfolio.

Every once in a while, these hunches will be a $11.7-million fortune, as was the case with Phil Ivey. But more often than not, such ill-planned investments will send you to the poor house. And if Phil Ivey continues spending more time at the baccarat table rather than the poker table, he’ll be on his way to the poor house as well, despite his latest win.

I’m not preaching from up on high here. This happens to all of us – I don’t care if you’re managing millions or a couple of thousand. In my own portfolio, I’m doing great on everything where I’ve done loads of research – like some of the picks from Dennis Miller’s Money Forever. My losses are skewed toward the side of portfolio based on the latest hunch.

With this in mind, I’m personally rearranging my portfolio a bit – getting rid of the short-term, spontaneous investments and putting them into places where I’ve buckled down on the research – i.e., our latest pick in Miller’s Money Forever. In case this article is ringing a familiar bell with you, I suggest taking a honest look at your portfolio and doing some rearranging as well. What’s just a hunch – er, gamble in your portfolio -and what’s a solidly researched, bedrock investment? If you find yourself holding onto former, maybe it’s time to let those investments go.

Invest where the odds are in your favor; don’t risk your portfolio to the luck of the draw.