What investors can learn from 'Jeopardy' phenom

[RonBoyd]

https://www.npr.org/templates/transcript/transcript.php?storyId=722198188

See from https://www.marketwatch.com/story/w...mes-holzhauer-2019-05-24?mod=mw_theo_homepage

In that sense, Holzhauer is bringing to “Jeopardy” what Sabermetrics brought to baseball. Popularized in the great Michael Lewis book “Moneyball,” the study of specific, previously ignored stats in baseball changed the game and how it’s managed.
…
Investing started toward a similar revolution in the mid-1970s, the cumulative effects of which we see in full force today. It was a scientific but utterly out-of-left-field idea: Since nobody can consistently pick only winners, it’s better to own the whole stock market.
The late, great John Bogle — who died in January at 89 — first questioned the value of actively managed investment funds in his 1951 senior thesis at Princeton. He later built on the work of Burt Malkiel, among others, to launch the first index fund at Vanguard.
Today, indexing has become a proven investment process — because it works.

 

[bobandsherry]

It also shows there's a lot of promise but ultimately there are more losers for one big winner? [emoji39]

 

[RonBoyd]

It also shows there's a lot of promise but ultimately there are more losers for one big winner? [emoji39]

I'm not sure I understand. Are you saying Indexing produces many losers and only few winners? What did I miss?

 

[Dtail]

I think it is just saying that like there could be a new style of playing Jeopardy, there is a new "well not new" better way of investing in the stock market.

 

[gcgang]

Huh. Not the opinion that would come to me. I'd get the idea that beating the market, if you hire a guy like Him, is possible.

 

[clobber]

I listened to the Planet Money episode when it came out. What stuck out to me was:

JAMES HOLZHAUER: And, you know, in my career, if I find an even money proposition that wins 52% of the time, I'm very happy, whereas on "Jeopardy!" the average contestant gets 70% of their Daily Doubles right. And, you know, I think that I have to be over 80 percent. So if I found an opportunity like that in my work, I would bet as much as the sportsbook would let me.

According to USA Today, James has a 97% "Response Accuracy Rate." I'm not sure how those numbers exactly translate, but his attitude of an 80% or 97% chance of hitting the daily double big (or any other question) results in what he considers a great opportunity. The other contestants are (and mostly have been) very timid. Mostly - they seem to want to bet 0.

Having recently watched the Showtime documentary "Action," I would really like to know Jame's sports betting record.

 

[Running_Man]

Only a passive investor could take an individual accomplishment of someone who risks everything on a single event and take it to prove how indexing makes everything possible.

Let’s take the key thesis, 70% of contestants get a daily double question right, with 3 questions odds on getting all three right is less 33.7% and losing an all in bet sends you to zero. What is making the current champion unbelievable is not some new application of probabilities to a math solution on the 70% equation but that he is getting 97% accuracy not the indexed 70%. He is never missing questions so he never has a set back. In the real world it take a supreme confidence in your ability to bet $30,000 of a $30,000 prize with your next contestant at $4,000 and win that way 25 times in a row when betting zero assures you 100% you will be $30,000 ahead at no cost to you. It is the equivalent of risking $30,000 to win $30,000 after risking zero to win $30,000. It is not math that is making him win but his superior knowledge, combined with fearless betting.

The closest investment example in finance to our new Jeopardy champion is Jeff Bezos not John Bogle.

 

[RonBoyd]

And here I thought it was all about how the effect a single new idea changed both baseball and investing and now the same for the game of Jeopardy (and perhaps several others). My take-away was that those that recognized this change were the winners in each of those activities.

More evidence that some (or more) times I am a little dense.