The Dao Jones

Financial Yin Swans

The Dao Jones, a pun on the Dow Jones with Daoist philosophy, is a stock market simulator created by Kevin Nguyen in Gamemaker: Studio. The simulator draws attention to the drastic yet unpredictable effects of active investing that is accelerated by high-frequency trading (also known as ultrafast trading). The occurrences of said effects are known as blacks swans and worsen stock price swings as well as unfairly manipulating stock prices, causing greater deviation from their true values. High-frequency trading, in addition to the surge in popularity of derivative markets and reckless lending/investing lie at the root cause of the dot-com bubble and financial crisis of 2008. The Dao Jones juxtaposes the same stock index with and without high-frequency trading to demonstrate the emergence of flash crashes and flash spikes, tiny black swans that seem harmless individually but cumulatively ruin economic welfare globally.

The player’s goal is to profit by carefully selling and buying using mouse clicks but by doing so he/she is taking part in a process similar to actual traders. The stock market has become so gamified with the introduction of computerized trading augmenting the desire to seize arbitrage opportunities. Thus, learning through play elaborates on the stock market’s transition away from near equilibrium and long-term gains to an unfair competition where the top stay at the top while the rest suffer. Those without expensive systems to make ultrafast trades never get a chance for arbitrage due to the stock market becoming like a dry lake. In such a lake, it is difficult to prosper; the (black) swan can no longer swim and so it soars.

A Daoist would say that this is not necessarily bad. One who understands the Way (dao) knows that a black swan is followed by a white swan. Like in The Dao Jones, a strategy is to anticipate the inevitable black swan and strike (invest) after it occurs when the market bounces back.