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[OC] People tried to beat the stock market 100K+ times in a simulation. They lost, a lot. (thelemmy.club)
submitted 2 weeks 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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[–] 11 points 2 weeks ago* (5 children)

Don't make me tap the sign..

Past performance is not an indication of future returns

This applies to index funds too. An entire market that runs on index funds cannot function at all, and the more they dominate the more risky the outcome. Past stock markets do not indicate what will happen in future, the distribution is different.

These articles/games push a message to invest and don't think, it is not a good message

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  • [–] 5 points 2 weeks ago (4 children)

    That's the incorrect conclusion.

    People claiming that by regularly adjusting your portfolio, they can get you better returns, are more often incorrect.

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  • [–] 1 point 2 weeks ago (3 children)

    That's not a correct conclusion either

    are more often incorrect

    Have previously been incorrect to an extent.

    You do have to adjust a portfolio over time regardless.

    And it may be the case that in future value-based investing is more successful than index tracking, which is especially the case when index funds get detached from the value of the underlying business.

    Actual performance of a business does matter

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  • [–] 3 points 2 weeks ago* (last edited 2 weeks ago) (2 children)

    Have previously been incorrect to an extent.

    Your insert of "Previously" is misleading. There exists no evidence that active management will be more correct in the future either.

    value-based investing is more successful than index tracking

    You fundamentally misunderstand. You can invest in indicies that track value. The important point is the need to avoid the management and transaction fees of active funds.

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  • [–] -1 points 2 weeks ago (1 child)

    Your insert of "Previously" is misleading. There exists no evidence that active management will be more correct in the future either.

    It's not misleading, it is entirely factually correct. The word previously refers to the past, and all comparisons are about past performance.

    The important point is the need to avoid the management and transaction fees of active funds.

    In that case you are referring to investment decisions based on very simplistic formulations. These don't do any detailed analysis of actual businesses and how they operate.

    If everyone did this, markets simply would not function, at all. You'd have a Keynesian beauty contest at best, but overall bad investment decisions and a stagnant economy. The more the market is dominated by simplistic funds the less it behaves like the past 100 years, and the less useful past statistics are at predicting the future.

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  • [–] 2 points 2 weeks ago

    It's not misleading

    It is. There is absolutely no evidence that future performance will favor active management.

    The more the market is dominated by simplistic funds the less it behaves like the past 100 years, and the less useful past statistics are at predicting the future.

    Citation needed.

    At the extreme I agree with you. If 100% of investors are passive then there is no information discovery. But words like "dominated", "less useful", "stagnant" betray your bias and weak foundational thinking.

    Academic consensus is that, net of fees, average active management does not beat a low-cost index fund.

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