James Holzhauer Cracks the Jeopardy Code

Last night, Jeopardy contestant James Holzhauer won his 20th straight game bringing his total winnings to slightly more than $1.5 million. Holzhauer uses an unconventional approach to the game, focusing his initial selections on the bottom of the board where the higher value questions reside. Aided by a quick buzzer finger and a seemingly vast reservoir of knowledge, Holzhauer’s strategy is to amass a large bank account early, then seek out the highly valued “Daily Double” where he can then multiply his current winnings with aggressive wagering.

The more traditional approach to playing Jeopardy had been to start with the easier, less valuable questions and work one’s way up to the more difficult, higher value questions. Holzhauer, who is a professional gambler, has taken a more analytical approach, one that website FiveThirtyEight likened to the recent preponderance of analytics in sports.

While intellect is important (and we suspect not in short supply among prior Jeopardy contestants), his innovative playing style is something new – and one which has proven extremely successful.

We think there are interesting parallels between Holzhauer’s innovative Jeopardy strategy and the data-driven investment strategy approach to investing pioneered by Dimensional Fund Advisors (DFA). In both cases, combining science with intellect led to a winning formula – one that showed conventional methods to be less sound than earlier believed.    

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