It’s not every day a “Jeopardy!” contestant becomes a household name and makes one of the longest running television game shows must watch TV. But that’s exactly what happened during James Holzhauer’s 32-game winning streak. Throughout Holzhauer’s dominant run, it seemed to be only a matter of time before he became the highest-winning contestant in “Jeopardy!” history, a record held by Ken Jennings. Jennings amassed a total of $2,520,700 over his 74-game winning streak in 2004. However, Holzhauer was defeated in his 33rd game, coming just $58,484 shy of Jennings’ record.
Despite not becoming the highest-winning contestant in “Jeopardy!” history, Holzhauer did manage to set the record for most money won in a single game and highest average score per game. Here are some other fun facts about Holzhauer’s reign as champion:
Holzhauer won a total of $2,462,216 during his 33 games
Holzhauer went a whole game without buzzing in incorrectly 11 times
Holzhauer was 71 for 75 (94.7%) on Daily Doubles
Holzhauer answered 97.0% of his clues correctly
Although Holzhauer’s robot-like precision with the buzzer and accuracy of clues answered contributed heavily to him rewriting pages of the “Jeopardy!” record books, his strategy will ultimately end up changing how the game show is played.
Most contestants follow the traditional approach of building up the categories. They start with the easiest, least valuable clues and move to the next slightly harder, slightly more valuable clue, staying in the same category until it’s complete. Holzhauer did something completely different.
Holzhauer went right to the harder, more valuable clues. He hunted the Daily Doubles and bet it all when he found them. This allowed him to build his bank early, due to his buzzer timing and accuracy advantages. If he were to fall behind early, he would have time to catch up. If he were to build a sizable lead, it would not allow his opponents to catch up.
This strategy, which will go down as Holzhauer’s trademark, was fueled by his gambler’s background. A common strategy in poker is to accumulate a large stack of chips early on to get ahead of opponents. You can then use this chip advantage to allow for larger bets that can force your opponent’s hand. Holzhauer applied this same strategy to “Jeopardy!” to increase his odds of success.
Just like future “Jeopardy!” contestants will be highly influenced by Holzhauer’s innovative strategy, investors can learn a thing or two as well.
Holzhauer’s strategy was built on making big wagers early in the game when he could afford to lose and making smaller wagers late in the game when he had a wider safety net. By doing this, he eliminated his need to make bigger bets later in the game to try to catch up to his opponents. This is risk management in a nutshell.
For investors, we should start building our account balances early. We can afford to take more risk when we are younger by having a greater allocation to stocks or speculating on a risky stock. Then, take less risk with our investments as we get older when the stakes are higher and the margin for error is smaller.
We don’t want to have to do the opposite. Accumulate too little when we are young and feel like we have to take more risk later to try to catch up. It can pay off big if we’re right but can be disastrous if we’re wrong.
In the end, Holzhauer was confident and comfortable enough with his strategy that he could stick to it, even though it was different than what other contestants were doing. In investing, we need to have the same confidence and discipline to know our strategies will work, even when others around us are reacting emotionally. There are many investment strategies and most of them will prove successful, but the only one that doesn’t work is the strategy you abandon to chase the next hottest strategy.