Retail Trader’s $75K 5-Year Active Trading Loss and Shift to Passive Investing

This analysis is based on a user-provided Reddit post summary [4] where a retail trader disclosed losing $75k over 5 years of active trading, occurring during a historic bull run in the S&P 500 (85.95% return from 2020–2025) [0]. The trader noted having “good days but more bad ones” and announced a shift to passive investing via the global equity ETF XEQT.TO, which delivered 71.16% returns with low volatility (0.81% daily standard deviation) in the same 5-year period [0]. Reddit comments emphasized the unusual nature of losing during a bull market, framed active trading as akin to gambling, and recommended passive investing for lower stress and better long-term returns [4]. Historical market data, including SPIVA scorecards referenced by Investopedia [1][2], supports the view that most active funds fail to outperform broad market indices over long periods, due to factors like higher fees, emotional decision-making, and overtrading—all likely contributing to the trader’s losses.

1. Bull Market Underperformance Paradox
   : The trader’s $75k loss during a sustained S&P 500 bull run highlights the challenges of active trading for retail investors, who often fall prey to behavioral biases (e.g., chasing trends, panic selling) despite favorable market conditions [0][4].
2. Passive Strategy Advantage Amplified
   : The 71.16% return of XEQT.TO [0] underscores that passive investing, with its low fees, tax efficiency, and diversification, can deliver consistent returns even in volatile markets, aligning with long-term market trends [2][3].
3. Retail Sentiment Shift
   : The Reddit discussion’s emphasis on passive investing benefits (lower stress, “money in better hands”) reflects a broader trend of retail investors moving away from active trading toward index funds and ETFs, particularly after experiencing significant losses [1][4].

• Risks Identified
  :
  • Active trading risks: Emotional decision-making, high transaction fees, underperformance relative to benchmarks even in bull markets [0][1].
  • Market volatility: While XEQT.TO has low historical volatility, global equity markets are subject to geopolitical and economic risks that could impact future returns [0].
• Opportunities Identified
  :
  • Passive investing opportunity: The trader’s shift to XEQT.TO provides access to diversified global equity exposure with a proven track record of solid returns [0].
  • Behavioral correction: The experience offers a lesson for other retail traders to avoid overtrading and consider low-cost passive strategies [1][4].

• A retail trader lost $75k over 5 years of active trading during an 85.95% S&P 500 bull run (2020–2025) [0][4].
• The trader announced switching to the global equity ETF XEQT.TO, which delivered 71.16% returns in the same period [0].
• Reddit comments framed the loss as notable during a bull market, criticized active trading as gambling, and recommended passive investing for lower stress [4].
• Historical data shows most active funds underperform indices long-term due to fees, behavioral biases, and overtrading [1][2].