“Jeopardy James” Holzhauer finally lost on Monday, June 3 2019, ending his 32-game winning streak just $58,484 shy of Ken Jennings’ all time money prize record. He took home $2.4 million in any case, losing the “Jeopardy” throne to a 27-year-old Chicago librarian, Emma Boettcher. In the end, Holzhauer lost because Boettcher managed to outplay him in his own fast-paced, statistically driven style. As I wrote for Marketwatch on May 25, this is only the beginning. Thanks to Holzhauer’s amazing run, how “Jeopardy” is played has changed forever. — Mitch Tuchman
He’s back, and he’s taking no prisoners.
James Holzhauer, a previously obscure sports gambler, is making national news and captivating millions by running the board on the long-running quiz show “Jeopardy.”
His fast-moving style of play has flabbergasted competitors and upended the normally reserved format of the game.
Holzhauer just roared back after a two-week break in the show, extending his run to 26 games and nearly $2 million. All-time champ Ken Jennings took home $2.5 million over 74 games before being dethroned in 2004.
The first thing to realize is that Holzhauer knows a lot of obscure facts. He has been playing competitive trivia in bars for years. You can’t compete in trivia without knowing the answers to questions about quantum physics, royal families, rare birds and so on.
He knows a lot because a group of “Jeopardy” geeks databased the universe of questions from years of show transcripts and put them all online. They also studied how to locate a Daily Double on the board — turns out, they’re mostly in the fourth row.
The second thing to understand is that Holzhauer is a gambler by profession, so he understands risk. Rather than build up through a category as players traditionally have done, Holzhauer leaps to the higher-dollar questions and assumes he’ll get them right most of the time. Which he does.
By doing this, Holzhauer quickly takes the big bucks off the board, robbing his opponents of the opportunity to catch up.
Then there’s Holzhauer’s whole buzzer strategy. He knows that how you hold the buzzer can shave a fraction of a second off your response time. Good players who know the correct in-the-form-of-a-question response still lose out because he buzzes in first.
The Daily Double, though, is the key to Holzhauer’s big winnings. A “Jeopardy” player who finds it can double his money, but only if he locates that clue first and bets big. Since Holzhauer knows he’s got a high likelihood of getting the answer right, he goes all-in.
“Jeopardy” experts predict that Holzhauer’s approach to the game will change how it’s played going forward. Anyone expecting to play in the more traditional slow, orderly, buildup style will be toast. In time, speedy challengers will crowd the auditions, and the game will go even faster. A new era of “Jeopardy” has begun.
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.
Now any major-league team hoping to become a perennial contender has to have its own analytics operation. Field managers who insist on “going with their gut” might win here and there, but they won’t find it easy to put together a winning season, let alone make a postseason splash.
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.
Financial advisers who fight it and do things the old way can find a winning stock idea here and there. But they can’t overcome the astounding effectiveness of low-cost funds, risk-adjusted investing and plain old compounding — or as Bogle once put it, “humble arithmetic.”
“Jeopardy” has been on TV since the mid-1960s, and the Alex Trebek–hosted edition for 35 years. For decades, everyone looked at “Jeopardy” one way. Then a single player took a hard look at the game and turned it all upside down.
In the same way, bringing science to investing changed the game for investors. It took the mystery out of Wall Street and created a completely different investment environment, one that favors the individual investor and disfavors the opaque, costly, old way of doing things.
As the guys at Planet Money, the great NPR podcast, explained in an interview with Holzhauer: “By the way, this is how you’re supposed to manage your retirement portfolio — riskier stocks when you’re younger, safer bonds when you’re heading into retirement.”
Or, to answer in the form of a question: “What is retiring with more?”
This story was originally published by Marketwatch on May 25, 2019.