“Most advances in science come not from eureka moments but from ‘hmmm, that’s funny.'”
The above quote is from Michael Lewis’ excellent new book The Undoing Project: A Friendship That Changed Our Minds, about Daniel Kahneman and Amos Tversky, the Israeli psychologists that essentially invented the field of behavioral economics. It struck a chord in me as I thought about the uphill battle the Evidence Based Investing movement faces in a world where entertainment is preferred over logic and reason. Perhaps instead of trying to fight narratives with numbers, we are better off incorporating some fun and humor into the mix.
I’m not the type of person that remembers my dreams more than five seconds after waking up, but recently I had one that stuck with me. I dreamt that there was an alternative channel to CNBC that people could turn to for investing and personal finance news and insights that provided no buy or sell recommendations, was completely void of gold, annuity and Forex trading commercials, and lastly – and most importantly – consisted entirely of game shows. I’d now like to share some of those game show ideas with you, my readers:
Host: Larry Swedroe
I can picture it now…
“I’ll take systematic trading strategies for $200 Larry”
“This portfolio diversifier is your friend, but you won’t be the leader in this relationship”
“What is…Trend Following?!”
Wheel of Fortune’s Formula
Host: Nassim Taleb
In reference to the formula popularized by Ed Thorp that uses information theory to improve the probabilities of making money in Vegas casinos and on Wall Street. Rather than spin a wheel to pick letters and guess phrases, contestants would compete with one another by betting Blackjack and simulating trading strategies to determine who can best apply mathematics and systematic decision making without letting their emotions get in the way. The natural pick to host this show would be Thorp, but since Taleb wrote the forward to his upcoming memoir, I chose him instead. And besides, the mental image of him calling contestants idiots while bragging about how much he can dead-lift would be too good to pass up.
Who Wants to be a Millionaire (Next Door)?
Host: Michael Kitces
I would love to see financial planning guru Michael Kitces play the Regis Philbin role of this personal finance spin-off of the once popular hit show. Contestants would work their way through a progressively harder set of questions and scenarios related to saving, spending, investing, tax-management, and estate planning until they reached the Million dollar prize. The original “lifelines” would be altered as follows:
- 50/50 → 60/40
- Phone-a-Friend → Phone-a-CFP®
- Ask the Audience → Ask your day trader brother-in-law
Co-Hosts: Wes Grey of Alpha Architect and Meb Faber of Cambria Investments
This show would be a last-man-standing type battle in the ultimate challenge: sticking with an underperforming factor for a multi-year period without tapping out and succumbing to the siren song of chasing past performance. Anyone who has lived through a decade of Value underperformance can tell you they would much rather eat a mouthful of worms!
Fund Family Feud
Host: Charley Ellis
Representatives of traditional high-cost, active management shops would go toe-to-toe with their counterparts from asset management firms that are providing low-cost, rules-based and empirically derived strategies.
This one may be a bloodbath…
The Price is (Always) Right
Host: Eugene Fama
Instead of having people guess the prices of different securities to see who gets the closest, Professor Fama just tells them what the current price is and recommends they not waste their time speculating and trust that markets are efficient pricing mechanisms.
This one may not get picked up for a second season…
Are You Smarter Than A Five Star Fund Manager?
Host: Michael Mauboussin
This show would put the role of luck and randomness in markets on full display. Grade school children and successful professional money managers are given relevant, real-time data and context of the current environment and asked to predict how various asset classes will perform over the next week, month, year. Results will be reviewed in subsequent episodes. I imagine the results would shock some. Others, not so much.
Trade or No Trade
Host: Morgan Housel
If your answer is ‘yes’ more than 10% of the time, you’ll probably lose.
The Newly-advised Game
Host: Barry Ritholz
This game would truly test how well an advisor knows their prospective client – and vice versa – before entering into what should be a meaningful, long-term relationship.
Co-Hosts: Warren Buffett & Charlie Munger
This riff on Hollywood Squares would be LEGENDARY with the occupants of the tic-tac-toe cubes being other iconic investors such as Seth Klarman and Howard Marks.
I won’t hold my breath for the network execs to back up a Brinks truck to my house for the rights to these ideas, but these tongue-in-cheek concepts would be a vast improvement over a lot of what passes for financial television these days. The reality is that prudent investing isn’t supposed to be entertaining and unfortunately, to many people, translating valuable financial concepts to a medium such as television is the equivalent of watching paint dry while eating broccoli.
I’m not faulting CNBC for putting on the programming that they do. Their job is to sell ads and boost ratings. Fear and greed happen to be their best levers to pull for doing that. I’m guilty of watching it myself sometimes, as there are certain shows or guests I find entertaining and interesting. But I am careful to not confuse what’s interesting with what’s actionable. As a rule of thumb, the higher a pundit’s confidence level is on a given topic, the higher your level of skepticism should be.
So those are the kinds of things I dream about. I should probably go see a therapist, shouldn’t I?