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[OC] People tried to beat the stock market 100K+ times in a simulation. They lost, a lot. (thelemmy.club)
submitted 3 days ago by to c/dataisbeautiful@lemmy.world
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Hello,

I made beatthecouch.com in July and it's basically a game where you try to beat the S&P 500 and buy/sell when you want. Your opponent is a couch. It buys on day one and never sells.

Now over 100K+ games later, the hypothesis stands: it's not wise to try to trade and time the market. Here's the original data from the actual games itself.

Source: the game's own database, every completed game Jul 12 to Aug 28. Tool: Python and matplotlib. Market data: S&P 500 daily total returns 1928 to 2019.

thanks!

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[–] 5 points 3 days ago (1 child)

That has the advantage of hindsight, though. At the time Microsoft came on the market, would you have been as confident as you are now that your buy-in was a good choice? Without knowing how the market is going to move, would you have known that NASDAQ was the right market to pay in? Can you pick the Microsofts and Oracles of today with a high degree of confidence without insider information?

I'm not saying it's not possible, but it would be much more difficult, the confidence wouldn't be as high, and not many people could beat the couch doing it. If it were so easy to beat the couch, a lot more people would be very rich.

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  • [–] 5 points 3 days ago (1 child)

    That has the advantage of hindsight, though.

    It all does. That's the problem with the game. You pick an index over a period during which there's a significant positive return and say the Couch gets the benefit of this return baked in.

    But I can't put my money into the S&P from 1929 to 2019. I have to play the market from 2026 onward. There's no guarantee I'll see the same results in the next fifty years that I saw in the last fifty.

    Without knowing how the market is going to move, would you have known that NASDAQ was the right market to pay in? Can you pick the Microsofts and Oracles of today with a high degree of confidence without insider information?

    You could say the same thing about the S&P. The only reason we're using that instead of, say, the Nikkei (which has an outright negative annual return from 1989 to 2019) is because it gives the couch a baked in advantage.

    If it were so easy to beat the couch, a lot more people would be very rich.

    It's easy to beat the couch if you have an option other than "cash". But it isn't easy to beat the S&P if you have no other information than a few weeks or months worth of stock ticker data.

    The bottom line is that you need a theory behind your investment that goes further than "it went up last year, so it must go to next year".

    That road leads to a large position in Bitcoin.

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  • [–] 0 points 2 days ago

    A good example: a lot of people have made good money over the last 1-2 years by moving money out from American markets. With Trump getting elected promising to start a global trade war, you didn't have to be Nostradamus to predict that US stocks would underperform.

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