If you were to waltz down Wall Street or perform a cha-cha-cha in the City of London, the sparkly sequins of Strictly would seem a world away from investing in financial markets.

Strictly what, I hear some of you splutter? Allow me to give you some pointers, as there are some lessons in here for investors.

Strictly Come Dancing has been a top percentile performer on UK TV screens since 2004, peaking at just under 12m viewers this season. Globally, the format has been exported to 60 other countries. Saturday December 19 is the grand final, where four celebrities and their professional dance partners boogie it out at Elstree Studios to lift the 2020 Glitterball Trophy.

People my dad’s age often complain they have no idea who these “celebrities” are. This year, the finalists are EastEnders’ actress Maisie Smith and professional dance partner Gorka Márquez; Made In Chelsea’s Jamie Laing and Karen Haeur; pop star HRVY (no vowels) and Janette Manrara and comedian Bill Bailey and Oti Mabuse.

As a superfan and maths geek, I’ve been a guest on the Strictly after-show It Takes Two, using my Seagull Strictly Stats to analyse the dancers’ past performances and predict their future trajectory (sound familiar, fund managers?). I didn’t sport any sequins, but I did wear my most eccentric maths shirt, displaying the square root of minus one.

Contestants progress — or are eliminated — by a hybrid ranking combining judges’ scoring and public votes. The bottom two each week compete in a dance-off, after which the judges send one couple home.

The voting process has a few parallels with the operation of financial markets.

When it’s time for the public verdict, you get to cast three votes via your smart TV. If you want to save a contestant from the peril of a dance-off, many people would automatically give all three of their votes to that couple. Or so you would think.

Actually, there is an element of gaming to the voting. If the judges’ ranking left your favourite high up the leader board, it might be shrewd to send your votes to another mid-ranking couple, because if they do well, this will push other rivals closer towards elimination. Second guessing who others might vote for can prove fruitful.

The judges have considerable dance experience and thus the points they award could be said to represent the fundamental value of each couple’s stock. While exact levels of public support via voting remain confidential, to my mind, this represents short-term market forces. Strong contestants such as Maisie have ended up in the dance off this season despite a high ranking from the judges. After defending her place in the show two weeks running, the market adjusted, with viewers awarding her additional votes to prevent a repeat scenario.

So how can we apply these quick steps or smart moves to our personal finances and investments? Like viewers trying to second guess the voting process on Strictly, investors have been second guessing the stock market for years — although 2020 has been a perilous year to do this.

Investors who follow the efficient market hypothesis believe that share prices reflect the long-run value of a company and should be indifferent to seasonal swings in that company’s sales. In theory, you can’t beat the market. My days as a junior trader at Lehman Brothers, right up until its 2008 demise, showed me how challenging it is consistently to outperform the market.

John Maynard Keynes, the economist, believed professional money managers were playing an intricate guessing game, and he used a beauty contest analogy. A common newspaper game in his day involved competitors having to “pick out the six prettiest faces from 100 photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole”.

So you don’t win for picking what you think is the prettiest face, but what you think others will pick as the prettiest face. Nudge theory proponent Richard Thaler, the 2017 Nobel laureate in economics, went on to describe the beauty contest analogy is an “apt description of how financial markets work”, as it acknowledges the “key role played by behavioural factors”. Ergo, you shouldn’t necessarily invest in what you think are the best companies in terms of fundamentals, but where you think the market will lead.

So how has this played out during the current series of Strictly? At the outset, HRVY and Maisie were favourites due to their youth (21 and 19 respectively, meaning lots of young voters) and prior experience with dancing. Indeed, Maisie is now the youngest ever Strictly finalist.

They have also come top of the judges’ average scoring charts, with Maisie on 26.7 and HRVY on 26.1 out of a maximum of 30.

Both can be considered Amazon-type stocks — high performing but not much upside to expectations when they deliver.

By contrast, many considered comedian Bill Bailey to be a rank outsider at the outset, thinking he would be little more than a comedy act. But his performances have surprised, with an overall judges’ ranking of 23.7 putting him in third place. As the final trophy is awarded purely on the public vote, he is the bookies’ favourite, and is one of only two contestants — the other being HRVY — to have avoided competing in a dance off.

As the oldest ever male celebrity to make the final, perhaps the Bill Bailey investment equivalent would be the bombed-out UK retail sector? Legacy businesses have suffered in the pandemic, but there are some that have surprised on the upside such as Games Workshop, which sells fantasy war game miniatures (Bill may even be a fan himself).

Smart stockpickers would have realised that Bill’s professional dance partner Oti had won last year’s final. When funds have star managers, it perhaps indicates they’re worth casting an eye over.

I use these analogies to bring some thoughts about investment into our everyday lives. Ultimately, the financial decisions we make will determine whether we’re able to dance gleefully through retirement or watch enviously as others sashay along to investment success.Bobby Seagull is a maths teacher and the author of ‘The Life-Changing Magic of Numbers’. Twitter: Instagram: