Update: This simulation on the Quartz website has been put behind a paywall. Here's a good substitute simulation where students guess the direction of the stock market.  Another idea is to have your students play STAX, the most popular game in the NGPF Arcade. 

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Great simulation (on Quartz) for students to see the futility of trying to time the market, which is the belief that you can make good decisions about when to get out of the market (if you think it is overvalued) and to get back in (when you think it is undervalued). I created this two-page mini-activity to guide your students through the game.

This simulation uses prices from the S&P500 for a ten year period (this ten year period changes every time you play the game too!) which unfold on the line graph at the rate of about one year of data every 7-10 seconds.  Here is a screenshot after seven years elapsed (note the talking head on the left which provides tempting advice as the game unfolds).

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Here is a sample output after the game is completed (total time per game play is about one minute):

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What you just saw is exactly how the S&P 500 performed from the week of May 16, 1986 to the week of Apr. 26, 1996.

You didn’t beat the market.

The $10,000 you invested turned into $20,262 [ACTUAL BALANCE]. If you hadn’t made any trades you would have made $7,812 more—leaving an ending balance of $28,074 [BALANCE IF NO TRADES]. At the time you reinvested, your trade had cost you only $4,112 but it ended up costing you $3,701 more because of the compounded gains you missed. Want to try again?

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What I hope students learn from this activity (see how it compares with the last reflection question): 

• To time the market successfully, you must make two good decisions: when to sell and when to buy back into the market.
• The market trends can be extremely difficult to predict; when you think the market has hit a peak, it will often keep going and when you think the market has bottomed, it often goes lower.
• The market often has significant moves up and down which make it that much harder to time.
• Over the long-term, buy and hold is a good strategy.
• The psychological feelings of regret and loss aversion that come from investing in the stock market often make investors their own worst enemy when making investing decisions.

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Like to teach using interactives? We have a comprehensive library of Interactives with reflection worksheets.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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