What a Prolific Jeopardy! Champion Can Teach You About Retirement Planning

For the last several weeks, a young Jeopardy! champion has been burning through his opponents. More accurately, 35-year-old James Holzhauer has been chewing up adversaries like Joey Chestnut dominates a pile of hot dogs.

As of the publish date, Holzhauer has won 22 contests—good for the 2nd longest all-time streak—and racking up insane, often six-digit daily winnings. His numbers are truly impressive: he already owns every spot on the top 10 all-time single-game winnings list, with no sign of slowing down.

(Update: Holzhauer’s win streak ended on June 3, after amassing 32 wins and $2,462,216 in winnings)

So how does he do it? And what can James Holzhauer’s Jeopardy! strategy teach you about retirement planning?

In this post, we won’t go into a whole lot of depth about exactly how he dominates opponents so efficiently; These posts have already done exceptional deep dives into Holzhauer’s unique strategy. But here’s the general idea:

• First, he’s wicked smart. This probably goes without saying
• Clicker timing: on Jeopardy!, contestants cannot buzz in until Alex Trebek finishes reading the clue. So, getting the timing right is crucial to ringing in first and Holzhauer happens to be great at it
• Fast and furious: Holzhauer jumps between categories rapidly to keep opponents on their toes
• Unconventional clue order: traditionally, contestants start with the lowest value clues to work their way into different categories. Holzhauer does the opposite, going for larger value, harder clues first. This allows him to build big totals early, which he can wager on daily doubles
• Huge bets: when he finds a daily double (he gets most of them), he’s not afraid to go big, sometimes even wagering tens of thousands of dollars

That last point is key to the connection between Jeopardy! strategy and retirement planning. In short, you should be investing money like James Holzhauer wagers on Daily Doubles. But going big on some wagers is really only half of what you need to know. So let’s unpack this a little more.

Why your investments should look like a Jeopardy! betting strategy

This strategy hinges on how Holzhauer’s Daily Double wagers change over time. In the Single Jeopardy! round, Holzhauer cycles through the high value clues first, starting with the $1000 clues, then the $800 clues, and so on. This way he has the most money possible when he finds the Daily Double clue. Then when he finds the Daily Double, most often he goes all-in, wagering everything he has. Generally, this gamble works out in Holzhauer’s favor because, again, he’s wicked smart.

But, if he was to get this daily double wrong, it’s still very early in the game, so chances are good that he’d be able to catch up by the end of the show. But since he normally gets the answer right (current success rate: 92%), this strategy usually sets him up with a big lead. So:

Single Jeopardy! round = riskier wager, with more time to make up for any losses

Then, there’s the Double Jeopardy! round. Often by this point, Holzhauer’s lead has expanded to the point that he can no longer be caught, meaning his total is more than double that of his nearest competitor so he cannot be beat in Final Jeopardy. In this situation, Holzhauer’s wagers become much more conservative. When he finds a Daily Double in the Double Jeopardy! round (again, he gets most of them), Holzhauer makes much smaller wagers in order to protect the progress he’s already made and ensure that he will win the game and keep his streak alive. Thus,

Double Jeopardy! round = conservative wagers to protect assets

Interestingly, Holzhauer’s bet big early, then be conservative late strategy is similar to the investment advice you’d receive from many financial advisors. And the rationale is pretty much the same: investors can afford to make slightly riskier investment decisions early in their careers when they’re still decades from retirement. This allows investors to take advantage of higher potential returns, taking on more risk while they’re still able to absorb any negative returns.

Then, as individuals near retirement, it becomes more important to protect their existing assets, since they have fewer years to make up for any losses. In these times, a more conservative investment approach is generally prescribed to protect one’s assets for their upcoming retirement.

So what would this look like in practice? How would a smart investor invest like a Jeopardy! champion?

First, please note: there is no one-size-fits-all formula for investing over the course of a lifetime. But in general, Holzhauer’s strategy would generally translate to a portfolio containing a higher percentage of aggressive growth stocks earlier in their career. Then, as retirement approaches, investors would gradually transition more and more funds into more stable, lower return investment options like bonds.

Now of course, this is not a perfect comparison…most investment opportunities do not have Holzhauer’s 92% success rate, so some diversification is necessary in order to protect assets at all times. Plus, going all-in on a risky investment strategy is not advisable at any time.

Finally, always remember that Jeopardy! is just a game, and investing your hard-earned assets definitely is not.