What Investors Can Learn from Jeopardy Winner James Holzhauer? Part 1

By Amit Rupani

There are many successful people in different domains. But then there are extraordinary people who are nothing but outliers at what they do. These are champions like Roger Federer, Muhammad Ali, Michael Phelps, Michael Jordan, Usain Bolt, Pele, and many others. We all know what would it take to beat these “once in a generation" icons. I have always been curious to learn more about these successful outliers, not only from sports but from any domain. One such outlier that I came across lately is James Holzhauer. If you have been a fan of Jeopardy! America's favorite quiz show, you know who I am talking about. He was an unstoppable force in the show's modern 35-year history.

Holzhauer won $2,462,216 in 32 days on Jeopardy! He has made it to the Hall of Fame of this quiz show creating many new records. No one in the history of this game has played the game the way he played and hence is considered as outlier by previous champions. This game show was originally debuted in 1964 and is still widely followed by many all over the country. So, one can imagine the number of participants that would have played this game by now, but he is considered as “the best" among all.

Now you might be wondering what does a quiz game winner have to do in an investment column. Since there are many commonalities in Jeopardy! game show and Investing, there are a lot of things that investors can learn from James Holzhauer. Let's find out more about Holzhauer first.

James Holzhauer is 35 years old and a professional sports gambler from Las Vegas. He was raised in an average middle-class immigrant family in Chicago, IL. He grew up watching Jeopardy! show with his grandmother and always wanted to be on the show. He started playing poker while in college. He was considered a Math prodigy in very early age and very high level of IQ since his early days.

Now let's look into what commonalities are in Jeopardy! game show and Investing.

Multi-disciplinary Knowledge: Jeopardy! participants can get questions from any subject that you can think of. They can be from Politics, Geography, History, Literature, Science, Current Affairs, etc.

While in Investing – an investor also needs to have multi-disciplinary knowledge, especially in subjects like Accounting, Economics, Human Behavior, Psychology, History, etc. Knowledge in varied subjects is helpful in both.

Exceptional Analysis & Lightning Reflexes: Jeopardy! participants need to have exceptional memory to save varied knowledge on different subject and be able to recall answers superfast and hit buzzer before others to answer the question. Often participants know the answer but are late to hit the buzzer. Knowledge without speed is of no use at Jeopardy!

While in Investing – an investor needs to be good at understanding the business and industry dynamics. Investor has to be ready with a “buy list" before market tanks so that one is faster at purchasing the bargains. And sell when it is fairly or overvalued. In investing reparation without speed for execution is also of no use as the stock market many times doesn't give a lot of time to think and decide.

Apply “Right" Strategy: Jeopardy! participants need to assess playing style of their opponents and apply “right" strategy accordingly.

While in investing – investor needs to know their investment philosophy and comfort level. And apply “right" strategy to avoid sleepless nights.

Bet Appropriately at “Right" Time: Jeopardy! participants get opportunities to double their winnings by wagering their winning points on some lucky occasions. How participants wager their points depends on either being a winner or loser. Being too conservative or too aggressive can hurt if participants don't know the right answer to the question.

While in investing – investor needs to manage the portfolio of securities by ensuring optimal allocation to each. And bet big when odds seem to be in investor's favor to make big difference to overall portfolio performance.

Good Luck!: If you are unlucky, no matter how good you are at Jeopardy! or Investing, one is not going to be very happy with the final outcome. One has to have good luck on their side in both the things.

In next month's edition we will get into the specifics of what we can learn from James Holzhauer about Investing.

Happy Investing!

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Amit Rupani, CFA is an Independent Investor, practices Value Investing principles, manages money for long-term wealth creation through Equities asset class. Email: rupaniamit@yahoo.com