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!

  • UnderpantsWeevil@lemmy.worldEnglish
    394·
    13 days ago

    The simulation is cute, but it’s also heavily stacked in favor of buy-and-hold by

    a) the selected timeline (from 1928 to 2019 the trajectory of the market was overwhelmingly upwards)

    b) the limited timespan (only two years to play, so you never have enough time to glean information from the simulation)

    And - most importantly

    c) no additional information to make your decisions

    You can’t see the prevailing interest rates. You can’t see p/e ratios. You can’t see what the S&P is invested in at a given moment.

    It’s a rigged game, where “buy and hold” is always the optimal strategy.

    Vary a, b, or c such that sitting on your money is optimal and you can “beat the couch” more often than not

    • Kairos@lemmy.todayEnglish
      371·
      13 days ago

      Saying that a near century long period is a bad sample is a little obtuse IMO

      • UnderpantsWeevil@lemmy.worldEnglish
        171·
        13 days ago

        A “near” century that conspicuously omits the Roaring Twenties leading into the worst market crash in history and the COVID crash at the end.

        As a counterexample, if you consider the Nikkie’s historical run - from it’s inception in 1950 to the 2019 benchmarks, the slog from the 1989 downturn to 2019 produces a negative ROI, about −1.65% annualized in yen. The Nikkei closed 1989 at 38,915.87 and 2019 at 23,656.62.

        Any Beat the Couch gambit during this period rewards people for staying in cash.

        Of course… since 2019, the Nikkei has seen a whooping 17% annualized return, skyrocketing to 66,405.56

        The S&P, by comparison, only grew 13% annually.

        So if you’re playing “Beat the Couch” with the Nikkei as an option, you can win by holding that over the S&P.

        But the real TL;DR; of it is that past performance isn’t an indication of future success. You can’t invest in the historical market. You have to play the market that exists today, without knowing in advance what the future return will be.

        • tyranny@crazypeople.onlineEnglish
          41·
          13 days ago

          thanks for this write-up! i still feel i don’t particularly understand, but i enjoyed reading it!

    • idunnololz@lemmy.worldEnglish
      81·
      13 days ago

      I mean if we include up to 2026 buy and hold is up even more. If anything this is underestimating lmao