We all know that it is dang near impossible to beat the market over any extended period of time. We all know that we are better off in index funds. But do we invest in index funds? No. We open up accounts at Robinhood and Coinbase, trade a bunch of futures and options, subscribe to newsletters and trading services, read books on how to beat the market, and waste a lot of time and energy trying to beat the market when we
Besides entertainment, there is a very significant value to be derived from playing market games. It develops a numeracy and financial sophistication that is relatively rare, and entirely applicable to personal finance situations. Should I rent or buy a home? Should I refi my mortgage, and if so should I do a cash-out refi? There is also value to this knowledge when investing in less sophisticated and less efficient markets, such as local (small town) real estate, or if one has a managerial or executive role in a company. Intuitively understanding concepts like NPV, volatility, liquidity, the difference between cash value and earnings ("earnings are theory; cash flow is reality"), and option premium help drive good decision making...as long as you can keep common sense and not get blinded by your own formulas and spreadsheets.
Besides entertainment, there is a very significant value to be derived from playing market games. It develops a numeracy and financial sophistication that is relatively rare, and entirely applicable to personal finance situations. Should I rent or buy a home? Should I refi my mortgage, and if so should I do a cash-out refi? There is also value to this knowledge when investing in less sophisticated and less efficient markets, such as local (small town) real estate, or if one has a managerial or executive role in a company. Intuitively understanding concepts like NPV, volatility, liquidity, the difference between cash value and earnings ("earnings are theory; cash flow is reality"), and option premium help drive good decision making...as long as you can keep common sense and not get blinded by your own formulas and spreadsheets.
Engagement is money in a world of entertainment