3 ms·

I really like this analogy, especially while WSB-style "YOLO" has become a life philosophy over the last 5 years. That said, I wonder if the "fantasy financial

I really like this analogy, especially while WSB-style "YOLO" has become a life philosophy over the last 5 years. That said, I wonder if the "fantasy financial league" game can become a lesson by selectively choosing a handful of stocks over a 30 year period. Tell the kids about the economics of the period (let's say the 1960s - 1990s) and provide a few companies with the tickers, names, and descriptions replaced. Watch as the "blown up" stock subsides, but the conservative investor wins in the long-run. EDIT: I cannot stop thinking about how ubiquitous YOLO as a philosophy has become in the last decade. Everything about life has become a binary of win or lose. Your stock market plays "won" if you are in the green, your tweet "lost" if you did not get effective engagement, your latest commit "won" if the established metrics succeeded after deployment. And then there are the implications in machine learning, where everything becomes a binary "correct or incorrect" assessment...

roland35 5y ago
I think it is a great idea, but if you want to reward a more sane investing strategy (ie low-cost broad index funds) you could maybe accelerate historical or simulated data and anonymize the ticker IDs? Obviously there will probably be one lucky YOLO player but you could rank everyone and also factor in risk-adjusted returns.
- astrange 5y ago
  If you want to end up with the normal retirement strategy you probably want to simulate regular contributions and occasional emergency withdrawals. If you just have a simulated pile of money and want it to go up, but don't actually need it in the meantime, then the risk isn't important and diversifying too much will just guarantee you lose. The usual math in MPT makes strange assumptions like a normal distribution anyway, so it thinks an asset is bad if it has too much upside risk.
ryandrake 5y ago
My class did almost this exact exercise in junior high back in the early 90's. Teacher gave us a menu of stock tickers of companies that have been around since 1960, complete with some rudimentary financial info as of 1960. Told us to research the companies and come up with a list of stocks to pretend we bought and held for 30 years. This was before the Internet so we couldn't just sneak a peek at the current prices. The goal of the exercise was to learn about research and ultimately diversification, but our team "won" by simply guessing the stock that was most well-known today, and YOLOing the entire fake money investment into it. Taught entirely the wrong lesson.
- sombremesa 5y ago
  It would've been so easy to avoid this, even in the internet age, by just replacing the actual tickers with made up names...
icelancer 5y ago
"EDIT: I cannot stop thinking about how ubiquitous YOLO as a philosophy has become in the last decade. Everything about life has become a binary of win or lose. Your stock market plays "won" if you are in the green, your tweet "lost" if you did not get effective engagement, your latest commit "won" if the established metrics succeeded after deployment. And then there are the implications in machine learning, where everything becomes a binary "correct or incorrect" assessment..." Much of this is reinforced through perceived and real rampant income inequality. If people think they can't advance without taking disproportionate risks - and they're mostly correct here - you'll start to see that action, and then it gets amplified in the social media atmosphere that we live in today.
spunker540 5y ago
I understand at Bloomberg they’ll do an internal “fantasy financial league”, but they rank by sharpe ratio, which adjusts based on the volatility/risk (something like that). But that’s such a good point about stock competitions generally showing kids that the reckless gambler wins the most - never thought about that.

roland35 5y ago

I think it is a great idea, but if you want to reward a more sane investing strategy (ie low-cost broad index funds) you could maybe accelerate historical or simulated data and anonymize the ticker IDs? Obviously there will probably be one lucky YOLO player but you could rank everyone and also factor in risk-adjusted returns.

astrange 5y ago
If you want to end up with the normal retirement strategy you probably want to simulate regular contributions and occasional emergency withdrawals. If you just have a simulated pile of money and want it to go up, but don't actually need it in the meantime, then the risk isn't important and diversifying too much will just guarantee you lose. The usual math in MPT makes strange assumptions like a normal distribution anyway, so it thinks an asset is bad if it has too much upside risk.

ryandrake 5y ago

My class did almost this exact exercise in junior high back in the early 90's. Teacher gave us a menu of stock tickers of companies that have been around since 1960, complete with some rudimentary financial info as of 1960. Told us to research the companies and come up with a list of stocks to pretend we bought and held for 30 years. This was before the Internet so we couldn't just sneak a peek at the current prices. The goal of the exercise was to learn about research and ultimately diversification, but our team "won" by simply guessing the stock that was most well-known today, and YOLOing the entire fake money investment into it. Taught entirely the wrong lesson.

sombremesa 5y ago
It would've been so easy to avoid this, even in the internet age, by just replacing the actual tickers with made up names...

icelancer 5y ago

"EDIT: I cannot stop thinking about how ubiquitous YOLO as a philosophy has become in the last decade. Everything about life has become a binary of win or lose. Your stock market plays "won" if you are in the green, your tweet "lost" if you did not get effective engagement, your latest commit "won" if the established metrics succeeded after deployment. And then there are the implications in machine learning, where everything becomes a binary "correct or incorrect" assessment..." Much of this is reinforced through perceived and real rampant income inequality. If people think they can't advance without taking disproportionate risks - and they're mostly correct here - you'll start to see that action, and then it gets amplified in the social media atmosphere that we live in today.

spunker540 5y ago

I understand at Bloomberg they’ll do an internal “fantasy financial league”, but they rank by sharpe ratio, which adjusts based on the volatility/risk (something like that). But that’s such a good point about stock competitions generally showing kids that the reckless gambler wins the most - never thought about that.