[From 5 AM Joel…]
This is a simulation game to test whether you can predict the timing of the stock market.
Try it: Market Timing Game
All you do is click the [Start/Pause] button, and the graph will start moving. Then, use the [SELL] and [BUY] buttons to move your money in and out of the stock market.
Goal is obviously to SELL when stocks are high and BUY when stocks are low.
Your investment results will be compared against the general market results. Here’s a screenshot:
Play it a few times. Tell me if you can beat the market!
If you’re like me:
- Most (if not all) times you end up with less money than the market. You should have just kept your money invested the whole time.
- You realize after a while that the less you click buy/sell, the better your results. The more transactions, the more likely you are to lose.
- You feel humbled. You are not as lucky as you thought you were.
Have a think about this game before you BUY or SELL any stocks in real life. It might just save you from making mistakes!
“Stay the course. An investment plan established during calmer times should not be abandoned in the midst of a market downturn.”– Tim Buckley, CEO of Vanguard in his recent public message regarding the coronavirus.
******
Every day Joel gets up at 5am and sends a short positive message around life and finances to friends, family, co-workers and strangers. Even on the weekends. This was yesterday’s that J$ really liked, so he asked if he could re-share it to everyone here. To learn more about these emails or to sign up to them, visit 5amjoel.com.
Get blog posts automatically emailed to you!
Needed this today. Soooooo tempting to sell right now. I know I should just stay the course. I won’t need this money for 20+ years.
Smart man!!
Results: Your ending balance is $69,924. This is 6% higher than if you had stayed fully invested in the market for the entire period (3 years). Congratulations, you outperformed the market by $4,186. Can you do it again? Your game used 3 years of S&P500 market data starting on 11/4/99. The market returned -34.3% during this period or -13.05% annually.
Nice work! I dare you to do it again and see how you do :) I did so-so first and then CRASHED AND BURNED the second as the data is different every time, lol… If only we could pick and choose the decisions to keep in real life! :)
I’m on the flip side….it’s annual bonus time so I’ll have a larger sum of cash on hand soon. Do I dump it all in at once? What if the market drops more? I’ll miss out on even cheaper buys! Perhaps I’ll split it up and invest 25% over 4 days. Maybe I should do each 25% weekly. This could be the beginning of the next big crash and I want to put my cash in at the lowest possible point. Does that hoarding some now to wait? But what if I wait and then the market jumps back up in a day and I miss it? Or I dump it in quick so I don’t miss it, but then it repeats a drop, but in double time! (I’m sure I’ll dump it all in as soon as I get it, but these are my daily thoughts during the anticipation time)
This is me too! We cashed out some Traditional IRA funds to convert them for tax purposes but now need to reinvest in our Roth IRAs and I’m feeling all kinds of jumpy about the ifs/whens.
I get it!!
And exactly why I dumped all my retirement stuff in the day after that first drop thinking I was so smart, only to then watch it continue to fall, lol….
Always so hard to tell when is the *best* but I do think generally you’re better just putting it all in and letting it ride since long term it’s all going to be working in your favor… You might just come away with $9,000,000 instead of $10,000,000 ;)
It does seem awfully greedy to hold out for that extra million when you put it that way…. :)
In having to think quickly about what decision to make, I keep messing up and selling when I think there’s a trough instead of a peak. I can’t keep my head on straight!! Buying and holding is definitely easier.
Haha YUP.
Just like in really life, some people will beat the market and think they are geniuses. They might even do it a couple times in a row!
Once in a while I can win a coin flip. Sometimes I can win twice in a row.
That’s right… And then it’s that 3rd time when you bet the farm and your cocky pants come flying right off ya, haha….
I beat it three out of four times, and it is fairly easy to beat if barely beating the market is your goal. I just sold when the market hit 110% the very first time and then bought the first time it dropped to below 110%. Then I never traded again. Most of the time in a normal market almost any time in history that works, but only if you stop trading for the rest of the game. I only slightly beat the market but I did beat it most of the time. I also only beat the market by a fraction of a percent, but my goal was just winning.
Are you taking on new clients? ;)