As Managing Director and Head of Global Financial Strategies at Credit Suisse, Michael Mauboussin advises clients on valuation and portfolio positioning, capital markets theory, and competitive strategy analysis. He has also authored three books -- Think Twice, The Success Equation, and More Than You Know -- and is an adjunct professor of finance at the Columbia Business School, and chairman of the Board of Trustees at the Santa Fe Institute.

In the below video, Mauboussin tells of a CEO who spent a lot of time as a young man working to improve his poker game. His technical skills continued to improve, but one day a family member gave him an important piece of advice; Mauboussin explains how that advice is just as applicable to investing.

A transcript follows the video.

Koppenheffer: You just mentioned blackjack a little bit, before. In some of your recent work, you talked about people playing poker and finding the right venues to play poker. It reminded me that, when I've done well playing poker, it's generally been in off-strip casinos! Now, I'm not a very good poker player, so that's mainly why.

In terms of finding the pools that investors can fish in, you talked about where institutional investors might want to look, which makes sense given your position. Where might individual investors want to look, if they want to try to gain an advantage?

Mauboussin: Really, you want to go where you think fewer people are participating, or people that are not as skillful as you are. That's the basic idea. It's actually a very difficult game to play.

I'll tell you a quick story on this, because I love this. Where I got this idea, or it crystalized for me, was a guy named Jim Rutt, who used to be the CEO of Network Solutions. He talked about playing poker when he was a young man.

Koppenheffer: He's probably a lot better than I am!

Mauboussin: By day, he would learn about the different probabilities, and look for poker tells and pot odds, and all this stuff, and by night he would play. He played in progressively tougher games, and won some, lost a little. Eventually, his uncle pulled him aside and said, "Jim, it's time to be less worried about getting better, and more worried about finding easy games."

This is a really important lesson for investors, because there are two key things. One is basic proficiency -- some of the things we talked about in terms of process a moment ago -- the second is finding those games.

There might be other things that might be interesting. For example, less-developed markets; emerging markets or even frontier markets might be an interesting example.

Frontier markets are a place where it's not big enough for institutions to participate, really, because there's not enough scale for it. But that might be a place where an individual might be able to make it worthwhile.

Some areas like that. The other one I'll say -- it's a tough one to find, though -- is when there are institutional constraints; when people are doing something on the other side of the trade because they have to. They have to, or they want to.

One example is spinoffs. Spinoffs -- there's nice literature on this for 25 years -- often, big institutions just sell off the spinoff components they get in their portfolios. They want nothing to do with them. They're often small, a little bit messy. That also might be something that might be an interesting opportunity for an individual to say, "I can step into that, get on the other side of those big institutions, and actually do well." There's some good evidence that, over time, spinoffs have been a very nice, profitable strategy.

Matt Koppenheffer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.