And how having friends makes the stalk market a lot more profitable.
Turnip is a fascinating addition in Animal Crossing: New Horizons, and arguably what promotes the game’s social aspect from a cute distraction to an absolute necessity (that is, if you want to play optimally). It is the de facto stock market on the deserted island, where you strive to buy low and sell high in order to pocket a decent profit. Plus, did I mention that you can visit your friends’ island for some bonus trading opportunities?
In this post, I examine the “stalk” market through the mean-variance optimization lens. Is it worth it? When should you sell? To what extent can your friends be of assistance? As some might expect, the answers lie in the modern portfolio theory.
Turnip, though appears to be a common commodity, has a few distinct traits to it -
However, turnip differs from most financial assets in at least one meaningful way. It is far from clear whether the underlying price follows some variation of geometric Brownian motion, which is bound to have unintended ramification if we decide to borrow from the asset pricing machinery. But it’s not totally hopeless, as will be shown shortly - we can pin it down numerically.
It’s also worth noting that in the absence of an optimal selling strategy (comment if you know better!), I am going to make an assumption that makes the problem far more tractable (and less path-dependent): let’s only sell our turnips at one specific time window (out of the total 12 of them), and such decision will be made solely based on Sharpe ratio.
For a long time, it has been known to the Animal Crossing community that the turnip price isn’t truly unpredictable. Instead, it follows one of the following four patterns:
Now thanks to the extraordinary reverse-engineering work done by Treeki (see here), the mystery behind turnip price has been deciphered in its entirety, to the point where it becomes possible to simulate the prices numerically, enabling Monte-Carlo-style analysis:
