Solo project I've been building this month, wanted to share here. The rules:
You get $10,000 and two secret years of real S&P 500 history, drawn from 1928 to 2019 (daily data, dividends included; your cash earns T-bill rates while you hide). One button: BUY or SELL. Your opponent is a couch. It buys at the start and never moves.
Every finished game is audited by 1,000 monkeys. It's a permutation test 1,000 replays with your same time in the market and same number of trades, on random days. Beat 90% of the monkeys and your win is stamped TIMED THE MARKET. Anything less is stamped LUCKY, in red ink, on your settlement document.
About 84,000 games have been played so far. The couch has won 63% of them. Roughly 1 game in 9 ends in a win that survives the monkey audit.
There's also a daily hand, same secret window for everyone, streaks, and a public ledger of humanity vs the couch.
If you have time, I'd love feedback, and I will answer any methodology questions, thanks!
The thesis - you do better in the market than holding cash - is a strong one. But the premise - that the only source of information you have available is the current real time... I'm guessing DOW Jones Index? it's deeply flawed.
Also, that you only have two years of investment time. And you start with $10k but never have more income to invest.
Where's p/e or p/b values? Where's dividend yields or debt to equity? Is there any other useful information to trade on - like Fed Interest Rate changes or technological breakthroughs or government spending policy?
You don't have to simply throw your money at the market blindly and you aren't forced to invest exclusively against a small basket of blue chip industrial firms.
You might also consider time periods prior to the bottom of the market in '29. Adjust your boundaries back a century - 1829 to 1929 - and the long string of depressions plus a civil war give you much better odds against the couch.
appreciate the feedback - obviously this is a rather simplified game trying to deliver a message. my personal experience is that having all that extra information in the real world doesn't really translate to beating the market as well. the buffett experiment is my go to in that sense
Something along the lines of buy companies you believe in, and hold them?
yes but even "simpler" than that - buy the S&P500 (it's an index fund, average of all the the top 500 companies in the stock market) and hold. over the mid to long run it's going to serve you well.