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Sarai Sepulveda

Professor McCann

English 1302.203

20 February 2022

A Run for the Money

There is a fine line between the spontaneous act of gambling and the lucrative art of

investing that the average person views as the economics expert’s nightmare of a terrifying

combination where the two cross and slowly fade into one another, becoming a singular entity.

The average person can easily testify that there is more knowledge on gambling than there is on

investing as it is a more frequent activity in the world of the ‘financially illiterate’. Still, the

similarity lies in the fact that the same amount of money spent on either activity can drastically

change one’s life, whether it be using five dollars to buy a lottery ticket or hop on the Bitcoin

bandwagon. After such a grand shift comes the part where one has to use a lot more than five

dollars in order to ensure that their money avoids going down the drain. What follows is a nasty

case of ‘investor's brain’ where the only previous knowledge one has is on the Wall Street Crash

of 1929 and now has to take on the role of ‘amateur Warren Buffett’. The reality of economics is

a hard hit, but it is not one that should keep aspiring investors defeatedly splat out on the ground,

for that is mistake number one. The media plays an influential role when it comes to the stock

market and is often seen as an all-knowing financial god for first-time investors that still hold an

ingenuous outlook on the market. Despite the effects of external factors, investors who are new

to the field still end up approaching it with the preconceived notion that they are guaranteed to

profit from their investment. Taking part in this experiment has proven that it is ideal to conduct

research beforehand and attempt to gather ground information on the investment process. Given
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that beginners investors are easily swayed, they are likely to first experience a decline in their

investments due to emotional influence, investor overconfidence, and lack of market analysis. 

Individuals tend to hold valuable assets with great care because one wrong move and

their whole life is ruined, making it no surprise that when it comes to managing said assets, they

are easily influenced by their emotions. Steep, decreasing line graphs are quick to get a reaction

out of first-time investors who are eager to determine what their next move should be. As

mentioned in “Stockholdings of First-Time and More Experienced Investors”, this often ends

with investors acting illogically, “...evidence from behavioral finance suggests that investors do

not always act rationally…emotions, not firm fundamentals, drive decisions” (Baker et al. 147).

This can lead to selling or trading one’s stocks simply because its price has reached a new high,

rather than holding back and waiting to see whether the stock may continue to increase. In

addition, this “gut feeling” that investors often have is not one that should be relied on as it

directly results in the consequences of investor overconfidence. It is a rare occurrence to make a

move in the stock market without having immediate feelings of regret right afterwards; therefore,

when investors are able to accomplish this with no remorse at all, it is obvious external forces

have come into play. To illustrate this, the article “Research of the Stock Price Overreaction and

Investor Overconfidence Issues” comments that when there is a high trade demand in stocks it is

because of the overconfidence that private sources feed investors (Raharja et al. 128). Not only

does this cause major damage to companies, but also to those very same investors who thought it

would be a good idea to contribute a portion of their life’s savings. The only intel that beginner

investors should be focusing on is the one in their bank accounts and in their stockholdings as

those will truly determine the change in the stock market. Although it might take a while for one

to fall in with the rhythm of the stock market, getting a head start can prove to be beneficial in
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the long run. Over time, multiple methods have been created in attempt to make the most

accurate stock market predictions. For various individuals, the common factor that causes their

failure is the lack of market analysis. Chen et al. list the repercussions that arise from this

neglect, “...increases time wastage in making investment decisions…leads to unsuccessful in

selecting suitable stocks…” (1296). Both of which will ultimately harm investors’ stocks and

money. There is no doubt that blindly entering the world’s financial markets will lead to serious

and dangerous declines in numbers, which is why it is best to suppress any internal biases and

focus on the facts.

Over the course of five days, fifty dollars were divided into three different stocks and

were then closely analyzed in order to determine their changes. It is also to be noted that stocks

are listed at a certain price depending on the company to which they belong, so instead of

purchasing a stock with fifty dollars, it was spent in three different stocks in which a share of

each was purchased. The official division was twenty dollars in Bitcoin, fifteen dollars in SPDR

Dow Jones Industrial Average ETF, and fifteen dollars in Meta Platforms. Using the application

Robinhood, these investments were able to be tracked in real-time, meaning that every second

one could witness their money increase and decrease. Some of the stock market basics are taking

into account that the markets open at 8:30 AM and close at 3:00 PM so when in the process of

buying and selling, it is most ideal to do it during the market’s active hours. One of the

advantages of the Robinhood application is that it presents after-hours information, which is the

measurement of how a certain company was doing during the market’s closed hours. Every day

at seven in the afternoon the current measurements of the shares were documented in a journal

that kept track of the change in numbers. This was often followed by quick look at Twitter to see

what the “experts” were saying about each company and how they believed their numbers would
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change. The factors that were recorded were its given equity, the total equity of all three shares,

the difference from the initial fifty dollars, and the difference of money from the day before. This

was done at the one-day mark in order to keep track of information that was given proper time to

change. By following these steps throughout the experiment, it was ensured that all the

information would be accurately recorded and calculated.

When the five days had officially come to an end, the concluding calculations were made

in order to get the final estimate of just how much those initial fifty dollars had changed. The

change was not drastic because as previously stated, it takes some serious investing and a long

period of time to truly witness a grand change in money. Nevertheless, there was still some

action throughout this experiment as those fifty dollars continuously scaled up and down the

stock market. Starting off with Bitcoin, the most reliable of all the shares, it was only from day 1

to day 2 in which a small $1.80 decrease was experienced. For the rest of the days, the Bitcoin

share only continued to increase by a couple of cents that eventually accumulated to dollars. The

Bitcoin share began with $20 and ended with $22.65. Moving onto SPDR Dow Jones Industrial

Average ETF, this share was a hyper one as it tended to tease by the difference of a couple of

cents each day. The share began with $15 and ended with $14.91, resulting in only a loss of nine

cents. Finally, Meta Platforms that was initially thought to be one of the more prominent shares,

turned out to be one of the more devastating, frown-at-your-phone type of share. As each day

passed, the share reduced its value by 20 to 30 cents. The Meta Platforms share started off with

$15 and unfortunately ended with $9.87, a whopping $5.13 decrease. It had definitely not been a

good week for Mark Zuckerberg and neither for the lucky folk who decided to invest in the

company while it was experiencing high volatility rates. Overall, the $50 that were invested took

five days in the stock market to become $47.43, resulting in a loss of $2.57. 
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Any finance expert must be swallowing back their words by now for this beginner

investor’s experiment could have gone much better. As each day passed and the new prices were

recorded, there was always an intense temptation that would sit behind the “Buy” button on

Robinhood. The general rule of “buy when low, sell when high” was engraving itself onto every

share as numbers would decrease. Yet, no trading occurred in order to preserve the raw results

the experiment would eventually bring. There was still a pang in the heart feeling that would

come after the drop of a cent, that would only increase the need to stick by the shares and not let

them go just yet. It is certain that if there had been a greater decrease from the initial $50, this

whole experiment would have been tainted with a prejudiced perspective on the stock market.

Fortunately, the small change did not cause so much harm that there is still hope for the shares as

time goes on. What any professional investor will say is that it is best to hold onto one’s stocks

or shares for years before the decision is made to sell them and that is exactly what will happen

on this investor’s end. 

To conclude, beginner investors have a higher chance of experiencing a loss in their stock

holdings because they are prone to emotional influence, investor overconfidence, and a lack of

market analysis. This experiment demonstrated that the $50 that were invested into the stock

market had great potential to turn into a profit if it were not for the former reasons mentioned.

One should always be informed on any situation they are about to jump into, especially if it is

one that deals with an individual’s financial state. The stock market is a dangerous place

especially for new investors who are still getting the hang of the way in which everything

functions. However, if this experiment has taught one anything is that when in doubt, face the

facts. No opinion is guaranteed to get one “big bucks” so why risk it all when the option to play
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it safe is right there. If played correctly, the game of investing will do one the favor of not giving

them a run for their money.

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Works Cited

Baker, Kent, et al. “Stockholdings of First-Time and More Experienced Investors.” Review of

Behavioral Finance, vol. 10, no. 2, 11 June 2018, pp. 146–162.,

https://doi.org/10.1108/rbf-11-2016-0077.

Chen, Yuh-Jen, et al. “A Novel Technical Analysis-Based Method for Stock Market

Forecasting.” Soft Computing, vol. 22, no. 4, 2 Nov. 2016, pp. 1295–1312.,

https://doi.org/10.1007/s00500-016-2417-2.

Raharja, Bayu, et al. “Research of The Stock Price Overreaction and Investor Overconfidence

Issues.” Business, Management and Education, vol. 15, no. 1, 29 June 2017, pp. 127–

139., https://doi.org/10.3846/bme.2017.358.