![[OC] People tried to beat the stock market 100K+ times in a simulation. They lost, a lot.](https://lemmy.world/pictrs/image/4f3baec5-843f-4b8a-b46d-e7b0237dc72f.png){kind=link}
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!
The market is easy-hard to make money in.
Easy: pick index funds, put your money in, keep putting money in regularly. That’s it.
Hard: don’t fuck with it. Don’t touch it. Don’t try to time it. Don’t panic and sell if the market rolls back. Don’t listen to people trying to tell you how to get rich quick. Don’t let people manage your money, they’ll move shit around and incur fees and taxes.
That’s how you do it. Yeah, there are people who get lucky and pull a win out of their asses on individual stocks. They’re the exception, that’s why they stand out compared to 99% of the rest of investors. But to win long term? Just do the above.
Judging by the change done to the NASDAQ 100 so that Space X could be in the index soon after IPO instead of having to stay out for longer and obey certain conditions like all other recently IPO-ed stock, even putting your money in an index fund isn’t safe anymore since in average stocks after IPOs massively underperform and that inclusion in the NASDAQ 100 forced index funds tracking it to buy the stock at its peak price (the stock price is still well below that, even below its IPO price).
So even owning index funds is now just another way to be one more of the retail sheep that’s there to get sheared by well connected insiders and pros.
SpaceX was blocked from index funds and the S&P 500. The S&P also stated they are not going to fast-track “mega-cap” stocks like SpaceX or OpenAI.
Has there been a change in the last month or so?
That was the S&P 500 - it almost did it but went back on that proposal and ended up not doing it.
The story with the NASDAQ 100 was very different and Space X was added to the index (if I remember it correctly) just one week after its IPO. You can check that it’s part of it, for example here (just search for SPCX) - under normal conditions it would have taken at least 1 year after IPO before Space X was added to the index.
While the S&P 500 hasn’t revised its rules, its still heavily weighted to the AI bubble. The index weights companies by market cap, not revenue. So by holding an S&P 500 index, you end up owning stocks wildly disproportionately to their actual fundamentals.
Your point is correct and indeed the S&P 500 is hugely exposed to the AI bubble (IMHO now is not a good time to be exposed to US Stock Markets in general and for Americans at least until the AI bubble blows geographical diversification for is probably a really good idea), but the previous poster ignored that I explicitly mentioned the NASDAQ 100, and not at all the S&P 500.
Space X is, right now, part of the NASDAQ 100 index even though its IPO was much less than a year ago and so by the old rules - which were changed to allow including Space X in the index just after IPO - they would not be part of that index.
A similar change in rules was suggested by the S&P 500 guys but after a public outcry they went back on that proposal and didn’t do it, but NASDAQ 100 did so anybody holding Index Funds were the NASDAQ 100 is a component were forced to indirectly by Space-X stock at the worst possible moment (right at the peak of the post IPO price spike) and that component of their investment is now around 30% underwater even though those people might not even want to be exposed to Space-X.
Anyway, my broader point stands that if one major index can be changed under you just like that in a way which will make those holding the index almost surely lose money, to force extra buying of a specific stock from some fat-cat or other by Index Funds, then this is something like that can happen to other indices and thus holding Index Funds even in major indices isn’t quite as safe as one might think from the customary shenanigans that make direct stock trading much riskier for Retail.
Well, why bother investing at all at this point.
If you have some savings not investing them in some way means the real value of those savings will go down due to inflation. For Americans there’s also the risk that the USD will collapse in value since it’s overvalued at the moment and the whole “World Reserve Currency” thing won’t last forever and when it goes it will likely be a massive crash in the value of the USD.
That said, investing doesn’t mean it has to be in the Stock Market.
Just put half your savings in gold and half in index funds.