Even with tomorrow’s Wall Street Journal in hand, half of 118 finance students lost money—and one in six went bust—exposing a brutal truth: knowing the future means nothing without knowing how to bet.
Zerodha CEO Nithin Kamath, reacting to the stunning results of Elm Wealth’s “Crystal Ball Challenge,” broke it down bluntly: “You’d expect easy profits. Instead, half lost money and 16% went completely bust.”
The experiment handed finance students a rare gift—24-hour advance access to the next day’s WSJ front page. They were given $50 to trade S&P 500 and Treasury futures across 15 historical scenarios. Predictions weren’t the issue. “They called market direction correctly 51.5% of the time,” Kamath noted. “That’s better than chance.”
But accuracy didn’t save them. “The problem? Position sizing,” Kamath wrote. “Many students bet huge portions of their portfolio on a single trade. Some used 20x, even 60x leverage. When they were right, they made money. But when they were wrong they blew up. All it took was a single misstep.”
By contrast, five experienced traders ran the same simulation—with a radically different outcome: average returns of +130%. “Why? They knew how much to risk. They bet small when uncertain, and big only when the odds were clearly in their favor,” Kamath explained. “That’s the art of position sizing.”
The takeaway wasn’t subtle. “Even if you could predict the future, it wouldn’t save you from poor risk management,” Kamath warned. “Trading isn’t just about being right. It’s about surviving long enough to stay in the game.”
He closed with a hard truth for aspiring investors: “Most retail traders obsess over predictions. But smart money obsesses over how much to bet when they think they’re right—and how to protect themselves when they’re wrong. Because in the markets, being right means nothing if you go bust before you’re proven right.”