(Disclaimer: I hold 100% VTSAX in my Roth IRA and taxable brokerage account) For one of my college finance projects, we're using StockTrak, where we were given $1 million in fake money to invest while meeting certain trading requirements. We're about two months into the project, and despite all the time I've put into it, I'm sitting just slightly below the S&P 500's return. I've been spending several hours a day reading financial statements, calculating intrinsic values, researching companies, keeping up with financial news, looking for undervalued stocks, and even trying day trading. All that work just to make nearly the same return as buying an index fund and doing nothing. Obviously, two months isn't enough time to prove I can't beat the market, but it's been a pretty humbling experience. I could've just put the entire $1 million into an S&P 500 index fund on day one (not allowed in the project) and spent the next two months doing literally anything else. Instead, I've spent countless hours analyzing companies, second-guessing my decisions, and stressing over market movements, all for a nearly identical result. And that's without even considering taxes, trading costs, or the possibility that my strategy could underperform by a much larger margin over time. The funny thing is that studying finance hasn't turned me into some incredibly successful investor making huge returns (like I maybe hoped). If anything, it's made me realize just how difficult it is to consistently outperform the market, even when you put a ridiculous amount of time into it. At this point, I'm starting to appreciate the simplicity of buying low-cost index funds, continuing to invest, and getting on with my life. After all this time studying investments, my biggest takeaway is that I might be better off accepting average market returns instead of spending my life trying to beat them. TL;DR: Trading individual stocks in a finance project has taught me that I can't beat the market and index funds would've provided me the same return with significantly less stress and time investment.
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