I've recently been dealing with a lot of stress due to losses trading and not timing the AI boom properly, leaving me not only in the red but relatively much worse than if I had just bought an indexed ETF following the general market. This led to me doing some assessment of how much money I would have made had I followed the wisdom of the crowd and not try to DYI my investments.
I've held most of my NW in cash, around ~$200k because since 2022 I've been waiting for "The Big Crash" and doing taxes for stocks in the country where I live is a pain in the ass. I have about $150k in two other accounts in the US and LATAM where I can trade more easily. In 2022 I was able to "beat the market" by staying in cash and riding my country's burgeoning bull market to a paltry +7.5% for the year (much better than $SPY's -18% or $QQQ -32.5%).
In 2023, I kept doing stock-picking and managed an improved +12.8% performance which this time underperformed the SP500 (26%) and NASDAQ (54.8%). I still kept most of my money in cash so these profits were mostly from trading with around ~20-30% of my NW.
In 2024 I had my best year, obtaining profits for +22.9% of my NW and still I underperformed the SP500 (24.9%) and NASDAQ (25.5%). These two years my stock picks were mostly bad but were salvaged by some good selections in my country's stock market, which boomed 58.3% and 120% respectively those years.
But the next year the stock market in my country began a bear market. I was -$10k on the year after Liberation Day and began to panic. I felt that any new investment I could make could potentially be "the top" and could only make my yearly losses worse. Then I started gambling with options. I had some good luck playing earnings and 0DTEs and managed to salvage the year and finish another paltry +13% (vs. 17.72% by SP500 and 20.77% by NASDAQ).
This year, my bad performance picking stocks caught up with my luck running out with options. I've lost up to -$20k so far in the year while SP500 is +8.45% and NASDAQ is +14.92%.
This got me thinking: what would have been my performance if I had invested in ETFs instead of trying this bizarre combination of conservative + gambling trading approach?
I ran some backtests assuming I maxed out my pension contributions (I don't have the exact performance data since I'm not subscribed but since I'm Europe-based I assumed it would follow $IEUR) and I put the rest on $QQQ. The result is that I would have been about 15% richer. And that's with a conservative approach of investing only about $1000 in $QQQ and over $3000 (assuming employer contributions) in $IEUR. And I'm not even accounting for bonuses. And I'm also not taking into account the enormous amount of stress trying to reach my yearly +10% goal takes on my mental health each year, which would have basically been 0 with passive investing.
The point of this post is a bit of public auto-shaming and also a warning for whoever is also trying to "trade" while holding a full time job. I'm not sure it's worth it unless you're really committed, i.e. you spend your weekends reading books, reading balances, analysing stocks, building bots and algorithms and setting up notifications to stay over your investments.