Take WSJ's Stock Investing Challenge

Summary

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Podcast Summary: WSJ Your Money Briefing — Take WSJ's Stock Investing Challenge

Date: June 4, 2021
Host: J.R. Whalen
Guest: Spencer Jakab, WSJ ‘Heard on the Street’ Editor

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Episode Overview

In this episode, J.R. Whalen is joined by Spencer Jakab to discuss the Wall Street Journal’s new five-week Stock Investing Challenge. The episode explores why WSJ launched the challenge, what lessons both new and experienced investors can expect, and how the exercises are designed to build smart investing habits. The conversation highlights common investment misconceptions, the unpredictable nature of markets, and the dangers of focusing too much on current events.

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Key Discussion Points & Insights

Why Create the WSJ Stock Investing Challenge?

• Growth in retail investors:

  • Post-pandemic, millions of new individuals have begun investing, many with minimal experience.
  • Quote: “We have had millions and millions of people join the ranks of investors, open up their first retail accounts. We had the meme stock squeeze in January. And so clearly there are a lot of inexperienced investors there.”
    — Spencer Jakab (02:29)

• Everyone has questions:

  • The challenge isn’t just for beginners; even seasoned investors “have lots of questions” and “there really are no stupid questions.”
  • Goal: Cover basics but also offer new perspectives to experienced investors.
    — (02:29)

How Does the Investing Challenge Work?

• Hands-on, gamified exercises:

  • Participants use fictional money to make investment decisions, experience simulated outcomes, and see expert and peer responses.
  • Quote: “A few of the exercises give you fictional money to invest... we ask you to imagine what’s going to happen, or even in one of the games... you make a series of bets with this fictional money and tell you how it worked out.”
    — Spencer Jakab (03:06)

• Learn about risk and real-world investing:

  • Challenges illustrate how people “wager their money and how people think about risk.”
    — (03:06)

Lessons for New Investors

• Expect volatility:

  • Recent years have been atypically positive; most inexperienced investors haven’t seen a typical bear market.
  • Quote: “Most of what you’ve seen... has been in an almost uninterrupted bull market, which is not the experience all the time. It’s easy to be an investor at a time like this. It’s difficult... when things are choppy or sideways or very scary.”
    — Spencer Jakab (03:56)

• Long-term mindset:

  • The challenge helps investors “stick with stocks and get that long-term compounding of wealth.”
    — (04:17)

Benefits for Experienced Investors

• Test your risk tolerance:

  • Even finance students often misjudge risk, as revealed by a recreated challenge in the series.
  • Quote: “People have a really poor idea of that. And so we have a fun game... that really teaches a fascinating lesson in people taking too little or too much risk in the market.”
    — Spencer Jakab (04:51)

• Intuitive yet surprising outcomes:

  • Exercises demonstrate common behavioral mistakes made even by those with market knowledge.

Challenge Highlights and Lessons

• Returns in different climates:

  • Exercises based on receiving a lump sum at various historic moments (booms, depressions, wars). Most people “guess completely wrong” about returns based on surface-level context.
  • Quote: “Just because things may look very good or may look very bad at the moment, it really tells you very little. It’s almost the inverse. You know, when things look pretty bleak actually have turned out to be the best times.”
    — Spencer Jakab (06:00)

• Stock picking vs. diversification:

  • Teaches how “the benefits of sticking to it and diversification” far outweigh guessing the next big winner.
  • Quote: “It also... tells you how likely an individual stock is to be a winner. And there’s a very surprising conclusion there, which is that it isn’t likely at all.”
    — Spencer Jakab (06:15)

• Not reliant on current events:

  • The biggest lesson: Ignore the headlines and think longer term.
  • Quote: “It really holds an important lesson about the stock market, which is not to pay too much attention to what’s going on right now, because these long run returns are completely independent of that.”
    — Spencer Jakab (06:45)

How to Join the Challenge

• Sign-up info:
  • Go to WSJ.com/investingchallenge
  • You can join and catch up on newsletters even after the start date.
  • Quote: “Even if you’re listening to this well after that, you can go back and do the first or second or third newsletter and get caught up.”
    — Spencer Jakab (07:10)

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Notable Quotes & Memorable Moments

• On recent bull markets:
  “Most of what you’ve seen... has been in an almost uninterrupted bull market, which is not the experience all the time.” — Spencer Jakab (03:56)

• On ignoring the present headlines:
  “The worst things seemed at the moment, the better your nest egg looked at the end of that period.” — Spencer Jakab (06:35)

• On stock picking vs. diversification:
  “There’s a very surprising conclusion there, which is that [being a stock winner] isn’t likely at all.” — Spencer Jakab (06:15)

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Timestamps for Key Segments

• 02:29 — Why the challenge was created (growth in new investors, need for basics/quizzes)
• 03:06 — How the challenge works (gamified, fictional money, lessons about risk)
• 03:56 — Lessons for new investors (market volatility, long-term thinking)
• 04:37 — What seasoned investors gain (risk challenges, behavioral lessons)
• 05:21 — Details of specific challenge exercises (returns in booms/busts, stock picking vs. diversification)
• 07:10 — How to join and follow along

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Final Takeaway

The WSJ’s five-week Investing Challenge aims to bridge both knowledge gaps and confidence in investing, using interactive and insightful exercises that reveal the truth about risk, returns, and human investing behavior. Whether you’re new to stocks or have experience, the challenge offers valuable lessons and a concrete reminder: the markets rarely move as you expect, and the best results often come from long-term, steady investing—not trying to outguess the headlines.

Transcript

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[J.R. Whelan]

Here's your money briefing for Friday, June 4th. I'm J.R. whelan for the Wall Street Journal. Do you think you could pick out the next red hot stock? Do you believe it's possible to time the market? If you're not sure, it might be time for a little investing 101 from the wall Street Journal Heard on the street team their five week investing challenge with will help you be a smarter investor.

[Spencer Jacob]

Even if you've been in the market for five years at this point and not five months. I think most of what you've seen, with the exception of when the pandemic was declared and you had a real swoon, has been in an almost uninterrupted bull market, which is not the experience all the time.

[J.R. Whelan]

So are you up for the challenge? Coming up, our Herd on the street editor Spencer Jacob will tell us what you can expect. That's after the break.

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[J.R. Whelan]

At first glance, investing in the stock market might look like an easy way to make with markets hitting new records and online investors pushing so called meme stocks to unheard of heights. But there's a lot more to stock investing and a lot more ways being a smart investor can help you boost your returns now and in the long term. WSJ's hurt on the street editor Spencer Jacob is with us to discuss the team's new five week investing challenge that aims to test your skills and better understand the market. Spencer, thanks for being here.

[Spencer Jacob]

Thanks for having me.

[J.R. Whelan]

So what inspired you and the Herd on the street team to launch the Investing Challenge? Why do this?

[Spencer Jacob]

Well, there was a very successful investing challenge last year and since then we have had millions and millions of People join the ranks of investors, open up their first retail accounts. We had the Meme stock squeeze in January. And so clearly there are a lot of inexperienced investors there. There are also a lot of people who maybe they have a decade or two under their belt, but have lots of questions. And there really are no stupid questions. So we try to address some of the sort, the real basics. But the things that we address also could be of interest to people who feel like they know a thing or two.

[J.R. Whelan]

So tell me, Spencer, how the Investing Challenge will actually work.

[Spencer Jacob]

There's a lot of advice out there on what to do and what not to do in the stock market. And until you really kind of face the decision to invest or not invest or how to invest, it's all theoretical. And so a few of the exercises give you fictional money to invest. Not real money, unfortunately, but fictional money. And we ask you to imagine what's going to happen or even in one of the games we have, you make a series of bets with this fictional money and tell you how it worked out. And we also tell you how everyone who went before you did. And it imparts a really fascinating lesson, actually, about how people wager their money and how people think about risk.

[J.R. Whelan]

Okay, so let's talk for a moment about this massive influx of brand new stock traders that we've seen just in the past six months. What could they learn from the five week Challenge?

[Spencer Jacob]

I think they'll learn a lot. I think one thing that they'll learn is what to expect. You know, if you, even if you've been in the market for five years at this point and not five months, I think most of what you've seen, with the exception of when the pandemic was declared and you had a real swoon, has been in an almost uninterrupted bull market, which is not the experience all the time. And you know, it's easy to be an investor at a time like this. It's difficult to be an investor investor when things are choppy or sideways or very scary. And I think that you'll learn a lot from the challenge in terms of how to think about that and how to cope with it and how to stick with stocks and really get that long term compounding of wealth.

[J.R. Whelan]

Now, you also mentioned people who might be more seasoned investors. What will they get out of it?

[Spencer Jacob]

I think they'll get a lot out of it. For example, there's an exercise in the Challenge, so we wrote it in a way that is accessible to anyone. You don't really need to know Anything about investing. One of the challenges, though, recreates, for example, a challenge that was given to a bunch of people, students and graduate students, who are seasoned in finance, and they did very poorly at it. And it was really an exercise in how much risk to take. Now people have a really poor idea of that. And so we have a fun game where you can go, you can play it again and again, get your spouse or your friends to play it as well. That really teaches a fascinating lesson in people taking too little or too much risk in the market.

[J.R. Whelan]

Great. So what are the kinds of challenges will people who sign up face?

[Spencer Jacob]

One of the first challenges will ask people what kind of returns. Let's say you had inherited a lump sum from an uncle or aunt. At various dates in time. We tell you what was going on. And there were times when everything was going swimmingly. The economy was really booming. There were times when things looked pretty bad and there was a war or a depression around the corner. And we told you what to expect. The lesson from that is that the long run returns of stocks have always been pretty good, but they vary an awful lot. And just because things may look very good or may look very bad at the moment, it really tells you very little. It's almost the inverse, you know, when things look pretty bleak actually have turned out to be the best times. It also some of the exercises tell you how likely an individual stock is to be a winner. And there's a very surprising conclusion there, which is that it isn't likely at all. It just really teaches you the benefits of sticking to it and diversification rather than thinking you found the next Amazon or something. Another challenge is, say, putting you in a kind of a time machine and putting you back in the 90s or the 60s or the 50s or the 30s or even before and saying, okay, you've got a lump sum of money. This is what's going on. What do you expect from the stock market in the next few decades based on that time? Some people know very well what the stock market did, but I think most people will guess completely wrong. We're telling you that things were booming or things were very bad. There were protests, and it almost is kind of the inverse of what was going on. The worst things seemed at the moment, the better your nest egg looked at the end of that period. It really holds an important lesson about the stock market, which is not to pay too much attention to what's going on right now, because these long run returns are completely independent of that.

[J.R. Whelan]

Okay, so if that sounds like something people would be interested in. How can they sign up?

[Spencer Jacob]

Well, if you haven't already received the email, you can sign [e-mail] investingchallenge and it's it began on June 3rd. But even if you're listening to this, well, after that you can go back and do the first or the second or the third newsletter and get caught up. They are weekly emails that you'll receive once you sign up.

[J.R. Whelan]

All right, That's Wall Street Journal heard on the street editor Spencer Jacob. Spencer, thanks for coming on the show.

[Spencer Jacob]

Thanks for having me.

[J.R. Whelan]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Electronic Payments Coalition Representative]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.