Free for 90 days: Sign up now and get 90 days managed free after your first deposit. See offer details

<title>Dismiss</title>
Behavioral Finance

Are We Always Rational When Judging The Markets? Let’s See!

“Bubble” is a word that appears very often in current news articles and television programs dealing with the economy. People are constantly debating the gold bubble, the tech bubble, the housing bubble … but what are these really? If we all agree to pay a certain price for something, what’s to say that it’s not worth that much? If we know that it’s a bubble, can it really be one?

Articles by Betterment Editors

By the Editorial Staff
Betterment Resource Center  |  Published: August 15, 2011

In order to answer some of these questions and really get to the bottom of this “bubble” phenomenon, we decided we’re going to do a little experiment in the office.

Indiana professor Arlington Williams seemed to have a good understanding of what truly makes a bubble, so we thought we would recreate an experiment of his. In his experiment, Professor Williams created a simple stock market for some of his college students.

This time, we’ll create a similar stock market for the people in the Betterment office.

Will our Betterment employees be able to stay smart, or will they fall into the same pattern as millions of Americans and offer more than a stock is worth, only to see that price fall… hard?

We’ll let you know on Wednesday, once we’re done. Every experiment needs a hypothesis, so tweet us (@betterment) and let us know yours!

This article and experiment were devised by our very own Sarah Brock. Sarah is one of the three excellent interns we’ve had at Betterment over the summer. Tune in for Part 2 later this week.

Recommended Content

View All Resources
How to Use 2018’s Market Volatility to Your Advantage

How to Use 2018’s Market Volatility to Your Advantage

The latter half of 2018 was a period of increased volatility. We view this as an opportunity for every investor.

Why Stock Market News Might Be Misleading You

Why Stock Market News Might Be Misleading You

Learn to separate the meaningful information from the noise. Knowing the right way to interpret market news can help us to make smarter decisions about how to manage our investments.

ETF Selection for Portfolio Construction: A Methodology

ETF Selection for Portfolio Construction: A Methodology

Betterment seeks to maximize investor take-home returns, which drives our investment selection criteria and process.

Explore your first goal

Safety Net

This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.

Retirement

Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.

General Investing

If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.

<title>Close</title>

Search our site

For more information and disclosures about the Betterment Resource Center, click here. | See our contributors.