What happens when a gambler invests in the stock market? The idea is to invest a defined amount every day. If the stock price goes down, you invest double the amount.
The dataset used, to test this gambler's approach to investing, was the daily closing price of the S&P500 index. Here is the head of the dataset:
| Date | S&P500 | |
|---|---|---|
| 0 | 2014-07-31 | 1930.67 |
| 1 | 2014-08-01 | 1925.15 |
| 2 | 2014-08-04 | 1938.99 |
| 3 | 2014-08-05 | 1920.21 |
| 4 | 2014-08-06 | 1920.24 |
Invest a defined amount every day. If the stock price goes down, you invest double the amount.
Invest the same amount that the Gambler Strategy will invest in a year, but all upfront at the beginning of the year.
Invest the same amount that the Gambler Strategy will invest in a month, but all upfront at the beginning of the month.
During 6.95 years, assuming the defined amount by the gambler is $10 if the S&P500 index goes up and $20 if it goes down or stays the same, the results obtained were:
| Strategy | Invested | Balance |
|---|---|---|
| Gambler | $36840 | $70405 |
| Yearly | $37655 | $79071 |
| Monthly | $36920 | $70925 |
The results show that the gambler was not on a good day.
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