Donald Trump’s first term broke many long-standing norms of behavior, not just of U.S. presidents but of modern world leaders in general, outside of a few rogue regimes. Trump 2.0 promises to do the same, but with a shift in strategy that has important implications for investors. It’s helpful to think of this in poker terms, and the hyperaggressive style that changed the game in the late 1990s.
When I started playing top-level poker in the 1970s, winning players had to be invited to in-person cash games, and avoid being cheated, robbed or arrested. Moreover, the social and business connections of the game were more important than the money in the pots. All this militated against the most aggressive strategies. The goal was to extract a decent profit without blowing anything up, and to give the other players what they wanted in return for their money — a good time, the thrill of playing with professionals, stories to impress friends and some gambling.
The transition to casino tournaments and online play changed that. Now, there’s no need to be invited, and the casino takes responsibility for security and collection. The goal is to bankrupt other players — or at least to survive while others bankrupt them — not to make anyone happy or extract a moderate profit. Moreover, there’s time pressure because you need your stack to increase faster than the blinds to survive. Many players fail not because they play badly or have bad luck, but because they fail to induce enough volatility to have a chance of finishing in the money.
Back to Trump. His primary strategy during his first term appeared to be what in poker is known as “semi-bluff.” Bluffs are large bets made with weak hands intended to win pots quickly, that will lose if called. The purpose of a bluff is not to win money directly, but to induce other players to call your large bets when you have strong hands. Semi-bluffs are bluffs with weak hands that have fighting chances to improve, so they are playable if called. The goal is to win money both now and later.
Semi-bluffs are a relatively passive poker strategy. They typically involve one moderate raise, followed by calls. Aggressive strategies use large raises and quick folds, with few calls. Semi-bluffs do not force hard decisions on other players, whether they call the bluff or fold it’s not a terrible decision. Aggressive strategies force hard decisions in the hope the other players will make more mistakes than you do.
I know a lot of conservative Democrats and traditional Republicans who were never-Trumpers in 2016, but who were pleasantly surprised with his actual first-term performance. His simple, bold, often reckless or illegal, campaign promises sometimes won despite strong opposition, producing generally good outcomes from a center-right perspective. When he didn’t win quickly, Trump did not muck his cards and go on to the next hand as bluffers do, he continued to struggle and often wound up with partial success.
If Trump 2.0 were the same, we’d expect him to begin implementing his promises before figuring out the details, building coalitions or analyzing legalities. These out-of-left-field proposals are semi-bluffs in the sense that they are not strong hands backed by solid arguments and support, but as things develop they could become strong—inventing details to make them feasible, attracting support, navigating legal obstacles.
In some cases, Trump won quick victories. He got his tax cuts, withdrew from the Trans-Pacific Partnership and Paris Accord, moved the U.S. embassy in Israel to Jerusalem (something promised by his three predecessors but undelivered). In others, such as building a wall paid for by Mexico, banning travel of people from Muslim-majority countries or repealing and replacing Obamacare, his semi-bluff would be called by the courts, Congress and the bureaucracy, resulting in long struggles with complicated outcomes.
In the early days of his second term, Trump appears to have abandoned semi-bluffs for more aggressive strategies. This has important implications for investors expecting mild center-right results emerging from the rhetorical sturm and drang.
One difference is Trump appears to hold better cards in 2025 than in 2017. It’s not that his electoral victory was overwhelming, it’s that it seems to have plunged the Democratic party into confusion and disarray. In 2017, despite losing the White House and having bad feelings about how Hillary Clinton got the nomination over Bernie Sanders, the party seemed strong with a powerful solid base of leadership and many energetic and attractive young progressives. Today the leadership seems worn out and rudderless, and the progressives seem less fresh and attractive. That’s not to say the party won’t recover quickly, but at the moment Trump seems to have the upper hand.
Trump’s 2025 initiatives seem to have firmer backing than the 2017 ones. Other initiatives seem to be pure bluffs. He has also brought aboard people who seem focused and capable of affecting radical change. The last president to try this approach was Ronald Reagan. Perhaps Trump, like Reagan, will succeed in wrenching the country into a generational shift to the right. But aggressive strategies can also lead to disaster, as when Richard Nixon plunged the country into dysfunctional chaos. In any case, investors should expect more volatility in the second Trump term than the first, even if there is no exogenous factor such as Covid.
An early signpost to the future will be the president’s response to successes and failures. If Trump has switched to hyperaggressive tournament poker, he’ll fold his bluffs quickly if called and double stakes when he thinks he holds the winning cards — working not so much to win on a particular issue as to bankrupt his opponents. This is how tournaments are played, not friendly regular cash games.
The patron saint of hyperaggressive poker was Stu Ungar. He is one of only two people to win the World Series of Poker main event three times in 1980, 1981 and 1997. He had only a few imitators in the 1980s, but by 1997, hyper-aggression was mainstream among top tournament pros.
Ungar was an extraordinary card player and practical psychologist, but a mediocre poker player who generally lost money at high-stakes cash games. Texas Hold’em demands no card play skill — no memory (unlike stud games) and only a few simple calculations anyone can memorize (unlike games such as pot-limit hi-lo Omaha). Psychology is very useful, but poker is primarily about betting strategy, something Ungar had no patience for.
Ungar never semi-bluffed and seldom called. He made big, noisy raises and folded quickly. He forced hard decisions — hard both strategically and psychologically — on other players, and he gambled on them making more wrong decisions than correct ones or, often, losing due to a failure to decide. This proved an effective way to win tournaments.
The sobering thing about this comparison is Ungar died alone and in debt, on the floor of a cheap motel, from heart failure after years of drug abuse. Why bring that up? Only to make the point that hyper-aggression may win poker tournaments but lose in life.
Pursuing casino-tournament poker strategies could result in a Trump second term that’s perhaps similar to Nixon’s. Or maybe the world today is more of a casino tournament than a friendly cash game, and hyper-aggression will win the day, with Trump as the second coming of Reagan. The one outcome that seems unlikely is mild center-right moves that end up pleasing conservative Democrats and mainstream Republicans, with a little raw meat thrown to MAGA.
The Reagan years caused a fundamental re-alignment of U.S. and global politics, and ushered in two decades of the greatest wealth-creation event in human history. Investors cannot afford to miss out on that possibility. The Nixon years destroyed the post-World War II global economic order, ushered in the stagflation and misery of the 1970s and created bad feelings that soured a generation on politics. Investors must protect themselves against that outcome. The tricky part? How to do both.
