Setup and Payoff

In the Christmas movie Die Hard, a businessman on a plane tells John McClane that to get over jet lag, he should take off his shoes and make fists with his toes. John thinks the businessman is an idiot. But when he gets to Nakatomi plaza he does it anyway. That’s the setup.

The payoff is that Hans Gruber and his thugs take advantage of a barefoot John for the rest of the movie.

The setup and payoff in Die Hard is top tier because the audience forgets about the bare feet and the businessman quickly. But those bare feet matter for the rest of the movie. The setup earns the payoff.

But the storytelling – and it is storytelling – from some finance writers, podcasters, and YouTubers about the economy and investment markets might have a setup and payoff problem.

The setup sounds like noise. The market was up or down last week, one sector outperformed all the others, the Fed said something about interest rates, some CEOs shouted about a problem they’re having, economic data came out, something big happened in geopolitics, and some prophet waxed poetic about the end of the world and sounded smart doing it. And all that sounds important.

But the right payoff is that none of the setup matters.

The setup is repetitive on purpose. The numbers, the ratios, the performance figures, the characters, the forecasts, they all change week to week and month to month. But that’s the point. Jason Zweig of the Wall Street Journal says it best:

My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself.

If the setup helps investors with the payoff, the content is appropriate. But if the payoff is anything other than “none of it matters,” the setup is garbage.

It’d be like John McClane finding perfectly fitted shoes a few minutes after Hans Gruber showed up.