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Weekend reading: New investing game has Stax of potential

Weekend reading: New investing game has Stax of potential post image

What caught my eye this week.

When my co-blogger The Accumulator told me about a new investing game, Build Your Stax, I was excited.

This educationally-minded simulation features all the asset classes – even individual stocks – and runs over a 20-year period.

A review by Allan Roth made it sound like The Matrix for money nerds:

Players will see high-flying stocks and learn that some may continue to fly while others will crash and burn.

They will encounter bull and bear markets, and learn the emotions and responses that accompany each.

Exciting! Would I be so bowled over I could swap my risky hobby of active investing for the virtual version instead?

Stax includes assets other than just shares, so it promised to be more than just a ‘pin the tail on the riskiest company’ paper money game.

Stacking the deck

Sadly, Stax didn’t live up to my hype.

Because you live through 20 years of market returns so quickly, you don’t really experience the emotional highs and lows of losing even fantasy money, as Roth suggested.

In fact it’s hard to even follow which assets are doing well, beyond a stark profit or loss line.

The individual stocks part is especially silly. There’s no data on the companies, and their prices whirl around seemingly randomly. I accept share moves might look that way if you’re not following companies closely, but whether a company – or its shares – does well is not random over the long-term, it’s related to earnings.1

That said, one neat aspect to Stax is it uses real-world data sequences for its asset classes returns – and it doesn’t tell you what time period you’re living through in advance.

The share prices aren’t really random, then, although they might as well be because you’re given no information about the companies.

More importantly, at the asset class level sometimes (usually!) a simple index fund beats everything. But sometimes you’ll wish you stayed in CDs (basically the US equivalent of our fixed-term savings bonds).

I did beat the computer, but I didn’t feel that proved I was the new Warren Buffett.

Oh, and this screen took the biscuit for me:

I’ll take my chances on a bear market, but I can’t envisage ever letting a marriage imperil my wealth.

For all my moans Build Your Stax is a fun way to spend 20 minutes. Give it a go and let us know what you think in the comments below.

From Monevator

How to buy and sell index trackers – Monevator

From the archive-ator: 10 things I’ve learned from being an active investor – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

£15bn pensions windfall: Are you due some after court ruling? [Search result]FT

US economic growth too robust for the Fed to bow to wobbling markets – Bloomberg

Nine out of ten Black Friday deals cheaper at other times, says Which?Guardian

Investor says sorry for huge losses [No, not THE Investor…]BBC

Young are saving more for pension, but many still confused and over-optimistic – ThisIsMoney

Graduates trapped in unpaid internships, study finds – Guardian

Simon Lambert: Five takeaways from the Bitcoin bubble – ThisIsMoney

Mainstream FIRE mini-special

Can anyone retire in their 30s? [Author emailed us, I missed it! 🙁 ]Guardian

Want to retire early? Get FIRED – Daily Mail

FIRE: Live frugally and retire early – BBC

Products and services

40 ways to get free money – Moneywise

Smart meters rollout labelled a ‘fiasco’ as consumers face extra £500m bill – Guardian

Building Societies reconsidering the case for 100% mortgages – ThisIsMoney

Ratesetter will pay you £100 [and me a bonus] if you invest £1,000 for a year – Ratesetter

Remember last December, when people paid a 2x premium to invest in a Bitcoin trust? – Bloomberg

Homes for sale on British islands [Gallery]Guardian

Comment and opinion

Yards after contact – The Reformed Broker

The dangers of maximization – The Research Puzzle

What if active investing wasn’t zero sum? [Trick premise but interesting]Morningstar

Simple isn’t easy [Dividend tax bit is US taxes]Humble Dollar

Change almost always comes as a surprise – The Financial Bodyguard

Rich people’s problems: There’s no such thing as free banking [Search result]FT

Why is divorce expensive? Because it’s worth it! – Financial Samurai

Meb Faber outsmarted by his childhood stock picks – Market Watch

At the intersection of art and money – Abnormal Returns

Saving regret is common, but it’s events not laziness that got in the way [Research]SSRN [h/t Abnormal Returns]

There’s still a case for owning Berkshire Hathaway – Brooklyn Investor

The rise of zombie stocks – Factor Research

Brexit

Brexiteer coup flops [Does anyone believe their magic thinking anymore?]Spectator

Brexit political declaration: What you need to know [Search result]FT

What happens if MPs reject the deal? [Video, great explainers]TLDR News

“…a deal so unimaginably bad that no-one wants it. Not the EU, not the UK, not Brexiters, not Remainers, not Tories, and not Labour. No-one wants it and we’re told to do it anyway.” – Ian Dunt

EU officials meet to finalize agreement – BBC

Dominic Raab: Theresa May’s deal worse than staying in EU – Guardian

Shocked – shocked – to read Tommy Robinson is now an advisor to UKIP – Guardian

Kindle book bargains

Why You? 101 Interview Questions You’ll Never Fear Again by James Reed – £1.99 on Kindle

Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations by Thomas L. Friedman – £1.99 on Kindle

The Spider Network: The Wild Story of a Maths Genius and One of the Greatest Scams in Financial History by David Enrich – £1.99 on Kindle

Tiny Budget Cooking: Saving Money Never Tasted So Good by Limahl Asmall – £1.09 on Kindle

Off our beat

High score, low pay: Why the gig economy loves ‘gamification’ – Guardian

The simple joy of ‘no phones allowed’ – Raptitude

There’s seldom any traffic on the high road – Farnham Street

‘Sci-fi’ plane with no moving parts flies successfully [Video]BBC

Computer vision: How Israel’s secret soldiers drive tech success [Search result]FT

And finally…

“Never buy anything from someone who is out of breath.”
– Burton G. Malkiel, A Random Walk Down Wall Street

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  1. The reason even those who study companies and their prospects closely can’t beat the index is not because share prices are a lottery. It’s because the market mostly does a good job at figuring out the earning’s outlook for different firms, and what to pay for them in advance. And the reason stock price moves can be described as ‘random walks’ is because the current price supposedly encapsulates all the known information about a company, making the next piece of information – and price move – in theory a crap shoot. []
  2. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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{ 64 comments… add one }
  • 51 Tyro November 26, 2018, 4:24 pm

    @TI, @The Details Man,

    On a different matter re children and wealth, is there any chance of an update/fresh comparison of child Sipps? I know Monevator did something a few years back, but an update that also includes lots of specifics (e.g. minimum amounts) would be welcome. A quick googletrawl a week or two back suggested (only) a few providers (Hargreaves Lansdown, A J Bell, Tilney Bestinvest, Fidelity, Alliance Trust, Killik & Co, Hartley (?)) and it would be useful – to me, certainly, but perhaps also to others – to have an overview of the differences between them. It would also be good to get a sense of which is easiest for a grandparent to operate and/or contribute to. Yes, legally the child’s parent or guardian is supposed to operate the account, but where that person wants to delegate it upwards to their own parent it would be helpful to know how each provider’s login and payment arrangements etc facilitate or impede that!

  • 52 The Rhino November 26, 2018, 4:31 pm

    There’s the psychological aspect? Removing optionality can save one from the paradox of choice? The path to happiness can be a counter intuitive one..

    https://www.ted.com/talks/dan_gilbert_asks_why_are_we_happy

    Or as Dumbledore succinctly put it,

    “The trouble is, humans do have a knack of choosing precisely those things that are worst for them.”

  • 53 old_eyes November 26, 2018, 4:39 pm

    On the marriage or not debate, I have no strong views on whether the state should or should not support marriage or does or does not. However, in 1983 when my long-term partner and I decided to have children, and she to be out of the workforce for at least a slug of time, we looked at the then rules and practices.

    It may well have changed since then, but at the time there were a whole bunch of things that were automatic if you were wed and difficult or not automatic if not.

    There was so much of it that we just looked at each other and said “you know what; it’s just much easier to get married”. So we did.

    So far so good.

  • 54 vanguardfan November 26, 2018, 4:45 pm

    @tyro re SIPPs.
    The problem with SIPPs is they tend to have relatively high fees if you have a small amount invested.
    You do have access to many/most personal pension options as well, and these can be cost effective for smaller amounts. I opened a personal pension for my kids with Aviva through Cavendish Online, which I think is still one of the cheaper ways to start a child’s pension (this was about 6 years ago). It is definitely simple, the main downside being a fairly restricted fund choice.
    Its now getting to a size where I am looking for alternative flat fee options. This is tricky as you rightly point out not many online brokers provide SIPPs, (I think you can add Charles Stanley Direct to your list). Most of them have a % fee for funds (my preference) which rules out pretty much all of the list for my purposes. I think the best I have found so far is Halifax. Other than that I may wait until child turns 18 when there is more choice.

  • 55 The Investor November 26, 2018, 5:39 pm

    @Tyro — An update / follow up does sound look a good idea, and potentially a great subject for the fastidious Details Man! 🙂 It’s another of the subjects that’s fallen between the cracks with our Great Book Folly. 😉 Anyway, watch this space.

  • 56 Ben November 26, 2018, 8:07 pm

    @TI
    Simplistic view, govt reflecting peoples views?
    Yes probably. I thought the couching of my language would have made clear how wedded (ha) I was to that argument.

    My post 42 set out my stall on my mental model of marriage. I thought it fairly uncontroversial?

    From my point of view my partner and I are a team, we divide thing equally, she’s the main breadwinner, but I don’t think that was clear when we first met, we have kids and aren’t married. I probably would be better off if we were married, but I don’t think my views have changed since I was expecting to be the major breadwinner.

    Your view (if I’m interpreting it correctly) that your money is your own, and you want to keep it that way, just seems to me to be the antithesis of a long term relationship.

    I hope you don’t think I’m being rude in the above paragraph, I hope it comes across as measured. These things quite often get lost in non face to face conversation.

  • 57 The Investor November 26, 2018, 8:18 pm

    Your view (if I’m interpreting it correctly) is that your money is your own, and you want to keep it that way, just seems to me to be the antithesis of a long term relationship.

    It’s not so much that (though in principle it amounts to the same thing I suppose) it’s more the risk of what happens if/when it goes wrong, and the lack of control. Will become clearer after my article.

    I hope you don’t think I’m being rude in the above paragraph, I hope it comes across as measured. These things quite often get lost in non face to face conversation.

    Tell me about it! 🙂 But this discussion is fine as far as I’m concerned, thanks. 🙂

    [Just edited last line to be a bit clearer!]

  • 58 Ben November 26, 2018, 9:17 pm

    Ok good 🙂

    I look forward to the article.

  • 59 Richard November 27, 2018, 8:21 am

    You just need to make sure you marry above your station – perhaps a member of the royal family. Than marriage makes perfect sense.

    There is also the question of fairness as well as risk. Cohabiting allows the more clued up partner to set things up in a way that they would keep everything in the case of a split. Throwing their partner onto the street. Marriage allows someone who hasn’t put much in to take a lot out. So how do you go about setting up cohabiting in a way that is fair to both parties?

  • 60 The Investor November 27, 2018, 9:33 am

    You just need to make sure you marry above your station

    @Richard — You know, I think of myself as a somewhat bright person but this realization came to me very late in life. i.e. That I could contemplate marriage from the financial risk point of view by marrying someone much better off. Only realized this probably five years ago or so. Doh! 😉 On the other hand, non-trivial if you’re a man, especially when my generation was learning the ropes. There’s a bunch of other reasons why I wouldn’t like marriage but it would help with that one.

  • 61 Vanguardfan November 27, 2018, 9:49 am

    Yikes. I think trying to reduce marriage to an analysis of its effect on your balance sheet is the epitomy of knowing the price of everything but the value of nothing.
    Frankly, to my mind, the emotional benefits and risks of committing to (what you hope will be) a life long partnership far outweigh the financial considerations – as with all human relationships, money is fundamentally not the point (oh yes, sure it can be used to benefit or destroy a relationship, but it’s a tool and not the underlying issue).
    I personally believe that as a legal institution it has some benefits/protections for children, and I find it hard to understand how some people can take on the (lifelong, highly risky, and definitely involving loss of control – financial and emotional) commitment of children more easily than the commitment of marriage. If there are no children then there is much less point imho (although it’s a good IHT avoidance strategy).

  • 62 Fremantle November 27, 2018, 1:36 pm

    I think it was Hamlet who said there are more things in heaven and earth, Horatio, than are dreamt of in your spreadsheet.

  • 63 Firearly November 27, 2018, 7:48 pm

    Re. marriage. I have been badgering my parents for years now to get married.

    They are in their late 60s/early 70s.

    Two grown up kids in late 30s/early 40s.

    Majority of their friends and wider family assume they are married. They wear “wedding” rings. My mum uses my dad’s surname for everything except official documents e.g. passport.

    So why bother getting married at this late stage?

    Security for my mum. She stopped working 40 odd years ago when she became pregnant with me. My dad was the main breadwinner. His pensions pay all the bills. My mum is a WASPI woman who has had her state pension pushed back year after year. I know that my dad’s pensions won’t continue to pay out for my mum when he passes, because I’m the one who helped sort out the annuities etc. If he goes, she will be reliant on me and my brother helping out, plus whatever state benefit she may be entitled to at that point. She doesn’t get any state benefits now either, because my dad is considered to be supporting her.

    Luckily, they are both in good health, as things stand. They don’t have any objections to getting married. They know it makes financial sense. It’s just inertia at this point.

    On the one hand, I joke if they don’t get their bottoms in gear, I’ll be signing them up to ‘Don’t tell the Bride”, but on the other, I seriously worry about it. For women of a certain age, marriage really is a form of financial security.

    On a completely unrelated tangent, any thoughts about the recent AJ Bell ipo? I have a LISA with them, so have been invited to apply.

  • 64 Richard November 28, 2018, 5:53 pm

    @TI I remember the words of advice I received when young – you can fall in love with a poor person or with a rich person. So make sure it is a rich person. Although it sounds like gold digging, if you believe there are a large number of people who could be your soul mate it makes sense that some of them will be rich. Of course, you have to be able to meet them which is not always easy or cheap. Polo anyone?

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