Uncertainty is the Name of the Game

 
By Chloe Lutts

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Trivia Isn’t Trivial

Uncertainty is the Name of the Game

A Stock for Today’s Market

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I just finished 74-time Jeopardy! champion Ken Jennings’ book, Brainiac. In addition to recapping his record-breaking wining streak on Jeopardy!, it’s an interesting investigation into the world of competitive trivia. Jennings visited and reported on everything from College Bowl tournaments (where the esoteric questions are geared toward the highly academic) to Pub Trivia nights, under the premise of finding out why people like trivia so much.

His final answer to that question—it stimulates the mind, makes us feel smart, and can build community among those who know the same strange facts—is nothing you couldn’t arrive at with an educated guess. But the glimpses into the competitive trivia world and the history of trivia are interesting nonetheless.

Trivia’s historical popularity, it turns out, is pretty closely correlated with the economy. Trivia fads like the game shows of the 1950s, the Trivial Pursuit craze of the 1980s and the Who Wants to Be A Millionaire days of the late 1990s all coincided with great economic times. “Trivia gives people something to do when the economy’s doing well,” as one of the experts Jennnings interviewed for the book said. “They want entertainment. They want to reminisce. They have time for pastimes.” In tougher economic times though, the pastime just seems … well, trivial.

Plus, the book is full of good trivia questions: What’s the longest book in the Bible? The pH number of a neutral solution? The only publicly owned U.S. sports team? The northernmost world capital? (Psalms, seven, The Green Bay Packers and Reykjavik, Iceland, respectively)

Plus, trivia can have that Slumdog Millionaire-like effect of bringing you back to when you learned the fact in question. Reykjavik was my first thought for the northernmost capital question above because I once went there in the summer, when the sun stays up until after 11 p.m.

Personally, I’ve always loved trivia. I liked Trivial Pursuit far before I knew the answers to any of the baby boomer-targeted questions (I was ecstatic when a relative bought the more youthful “Millenium Edition.”) I love playing along with Jeopardy! from the couch, although not having cable TV means I have to get a little creative to watch it these days. And I usually play pub trivia with friends at least once a week. The best part of pub trivia is getting to muddle out answers among your teammates; my least favorite part is the preponderance of pop culture questions, which are a weak area for me.

I also love crossword puzzles, the perfect mix of word game and trivia. Like Trivial Pursuit, my excitement about the medium far preceded my knowledge of the answers—I used to try and “help” my dad with his puzzles, mostly to no avail. I’ve gotten much better over the years though, and just finished my first solo Thursday New York Times crossword in an hour and 40 minutes last week. It was an exciting day. (Incidentally, the Times’ crossword puzzle app is my absolute favorite thing about my iPad. If you’re a crossword solver on the fence about getting one, I highly recommend it.)

Getting better at crosswords isn’t just about learning that most Italian mountains are going to be Etna, and most spongy plants aloe (it’s all about the vowels). There’s also a decent amount of brain training involved—learning to think in crossword mode, if you will. I don’t know if it’s applicable to everyday life (most studies say no, unless you’re doing very similar tasks) but it sure feels good when you finally figure out that the answer to “King’s specialty” is “Bestseller”—not referencing a regent, or even Elvis, but Stephen King.

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As for the market, I think the situation was well-summed-up by this headline that  saw last week: “A Crisis That Markets Can’t Grasp.” While the article was about Japan, its point that, “ There is still no clear consensus about how far the economic shocks will reverberate” tells you a lot about today’s market. Uncertainty is the name of the game today.

The best advice for today’s situation seems to be to stay defensive and to hold off on new buying until things stop going down. For growth investors, that may mean selling some of your weakest holdings. However, it seems unlikely that this is the start of a prolonged bear period—sentiment just wasn’t elevated enough at the recent peak, for one thing, and there are still plenty of potential buyers waiting on the sidelines of the market. Some of them may become buyers of this dip, eventually, and help stem the tide of selling. Don’t hold your breath for that day—we could see a much more serious correction develop before it comes—but keep an eye out for it.

In the meantime, you don’t have to sit on your hands. Keep a Watch List of stocks that are resisting the market’s downward pull. The buying interest—and lack of sellers—in these stocks means they’re likely to be the outperformers once the market finds its legs again. A decent example is Electronic Arts (ERTS), which has held up fairly well relative to the market. Plus, the tight, low-volume range it’s trading in could act as a nice base for an eventual breakout. Nate Pile, Editor of Nate’s Notes, wrote the following about ERTS in the latest Dick Davis Investment Digest:

 “Electronic Arts’ stock has been an ‘unexpected star’ over the past month-and-a-half, thanks in part to a growing sense of optimism on the part of investors that the company may finally be ready to spread its wings and fly again following the paradigm shift that has dramatically reshaped the gaming industry over the past few years. Yes, there is still more work to be done—and if the economy turns weaker again, it will obviously make it more difficult for the company to find success—but I am pleased with where the company is currently sitting. Now that investors appear to be willing to bid the stock up again, I am raising the buy limits and adding a few more shares to both Portfolios. ERTS is now a strong buy under $16 and a buy under $19.”

If it can continue to hold up in the face of uncertainty, watch ERTS for a powerful buying surge once the market turns.

Learn more about Electronic Arts and other top stocks featured in Dick Davis Investment Digest!

Wishing you success in your investing and beyond,

Chloe Lutts
Editor of Investment of the Week

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