Science Fair Project

[bdjbcw]

I am looking to see can math beat the market. meaning stock market. i've taken the S&P 500 from January 1, 1987 to January 12, 2008. Supposedly I've started with $1000. I have no idea where to go from here. any suggestions?

[iNow]

Math can help you model past markets, and it can help you anticipate future markets if the inputs are sufficient and the equations in the models are an accurate representation of the market in reality, but there is an inherent volitility and uncertainty in the stock market, so math will never "beat it." You can come up with probabilities that will help you to "better" predict it, but nothing is certain, especially in stock markets.

 

Now, what do you mean you've "started with $1000?" Are you looking to invest this, or is this a homework question of some sort?

[bdjbcw]

I am doing a project. I took the S&P 500 data from January 1, 1987 to January 29, 2008 from yahoo finance history. I took each day's close and calculated the percent change. Every time the day closed one point or more above I would sell and when the day closed one point or more below I would buy. So if I were to start with $1000 then I would take the money amount and subtract and add until I reached the final date which would decide whether or not I made a profit.

This is a section of my excel spreadsheet.

First 25 Days

Date Adj Close Buy or Sale if above or below 1.00

1/2/1987 246.45

1/5/1987 252.19 2.28 s

1/6/1987 252.78 0.23

1/7/1987 255.33 1.00 s

1/8/1987 257.28 0.76

1/9/1987 258.73 0.56

1/12/1987 260.3 0.60

1/13/1987 259.95 0.13

1/14/1987 262.64 1.02 s

1/15/1987 265.49 1.07 s

1/16/1987 266.28 0.30

1/19/1987 269.34 1.14 s

1/20/1987 269.04 0.11

1/21/1987 267.84 0.45

1/22/1987 273.91 2.22 s

1/23/1987 270.1 1.41 b

1/26/1987 269.61 0.18

1/27/1987 273.75 1.51 s

1/28/1987 275.4 0.60

1/29/1987 274.24 0.42

1/30/1987 274.08 0.06

2/2/1987 276.45 0.86

2/3/1987 275.99 0.17

2/4/1987 279.64 1.31 s

 

Last 25 Days

12/20/2007 1460.12 0.49

12/21/2007 1484.46 1.64 s

12/24/2007 1496.45 0.80

12/26/2007 1497.66 0.08

12/27/2007 1476.27 1.45 b

12/28/2007 1478.49 0.15

12/31/2007 1468.36 0.69

1/2/2008 1447.16 1.46 b

1/3/2008 1447.16 0.00

1/4/2008 1411.63 2.52 b

1/7/2008 1416.18 0.32

1/8/2008 1390.19 1.87 b

1/9/2008 1409.13 1.34 s

1/10/2008 1420.33 0.79

1/11/2008 1401.02 1.38 b

1/14/2008 1416.25 1.08 s

1/15/2008 1380.95 2.56 b

1/16/2008 1373.2 0.56

1/17/2008 1333.25 3.00 b

1/18/2008 1325.19 0.61

1/22/2008 1310.5 1.12 b

1/23/2008 1338.6 2.10 s

1/24/2008 1352.07 1.00 s

1/25/2008 1330.61 1.61 b

1/28/2008 1353.96 1.72 s

1/29/2008 1362.3 0.61

I turned in my project and it was thrown together, but I did do it. I did not figure out whether or not I made a profit. I believe that I did though because the stock increased by over 800 points over the 2 decades.

[john5746]

I turned in my project and it was thrown together, but I did do it. I did not figure out whether or not I made a profit. I believe that I did though because the stock increased by over 800 points over the 2 decades.

 

Your premise would be that you would actually beat just holding on to an index fund of the S & P 500, which I doubt that you would. Even assuming free trading, buying and selling at first impulse would be about the worst thing you can do. Math beats complete ignorance, but it won't beat knowledge of the fundamentals and luck, IMO.

[Severian]

I did not figure out whether or not I made a profit. I believe that I did though because the stock increased by over 800 points over the 2 decades.

 

From your figures, you increased your money by a factor of 5.5, which over 20 years is equivalent to an interest rate of about 8.9%, which is not too bad, but not amazing.