How the Market Can Help You Win Oscar Pools
D.K. is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Regrets. Self kickings. Coulda shoulda wouldas. That's the usual mood of Monday morning Oscar poolers, who look back at the winners the night before and smack their heads and realize that it was so obvious that Meryl Streep was going to take it from Viola Davis – yes, according to that Globe win and all that other intel that we should have been paying attention to.
For example, last night I got 17 of the 24 categories on the Oscar ballot right. Unfortunately for me, my closest competitor got 18. Now looking back on it I should have voted for Streep, against my instincts and quelling my personal lack of interest in Ms. Streep's career and film choices.
Ultimately, the hardest categories to predict are the shorts: action, live, and documentary. The only time I won an Oscar pool was when I had seen all 15 of that year's films and could guess what the Oscar voters would go for (1). Based on the astounding opening shot of The Tsunami and the Cherry Blossom, I was certain that it was going to win, and so overlooked Saving Face, about extreme plastic surgery for acid victims in Afghanistan. And I couldn't believe that the Academy voters would let Pixar escape without at least one statuette, and so picked that company's La Luna over the winner, The Fantastic Flying Books of Mr. Morris Lessmore. Pixar was formerly owned by Steve Jobs and currently is a subsidiary of The Walt Disney Company (NYSE: DIS). Indeed, it is unusual for Disney to escape the night without a statuette, though Disney distributed The Help, which was awarded for supporting actress. I was right about the live action drama short, The Shore, about Ireland post-Troubles. Still haven't seen it, though.
In addition, I was fairly certain that the Paradise Lost sequel was going to be the winner in documentary feature. This film brought up to date the cast of the West Memphis Three, whom filmmakers Joe Berlinger and Bruce Sinofsky helped free from jail, and in one case death row. But I hadn't seen all the films and Undefeated, the film about an African-American football team co-produced by Sean Combs, won.
But in my Oscar pool party, how did its winner win? She went straight Vegas odds, missing out on the other six categories only when she overrode the oddsmakers, as in the foreign film category, when she picked In Darkness, the Holocaust tale, over the Iranian judicial drama of A Separation.
The point, however, is that the odds makers dispassionately know what they are talking about. They are monitoring all manner of input and intel and letting gamblers move the favorites like driftwood in the tides. Just as the market does.
The Oscar pool should be viewed as an investment, not a bet or a dare. It should not be speculative, but based on sound analysis – or as sound as any appraisal of mostly irrational forces can be. The best way to take the mood of the roughly six thousand Academy voters is to monitor the rising tides of Vegas odds. Look at the overall.
As David M. Blitzer, writes in the introduction to the Standard & Poor's 500 Guide, "Simply looking at whether the market—the index—gained or lost can tell you a lot about what happened to your portfolio. For most portfolios and most stocks, the largest factor in their movements is how the overall market did. The second largest factor is often how similar stocks—in the same economic sector or industry—behaved. Because the S&P 500 covers 75 percent of the total value of the U.S. equity market, it is a very good indication of what the market did. The stocks in the index are all classified into sectors and industries, so you can use these segments of the index to see if your stocks did better or worse than others in the same sector." And as Burton G. Malkiel suggests in his book, A Random Walk Down Wall Street, trust the collective wisdom of the market.
Next year, when Meryl Streep is no doubt nominated again, I will be putting aside all emotions and going straight Vegas down the line. And seeing the films next time will also probably help.
1 In Academy balloting, only those who have seen the films and signed in at special screenings can vote in those categories, as well as in the documentary feature category.
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