I agree market returns are equal in expectation, but you’re exposing. yourself to more risk for the same expected returns in the “I pick stocks” world, so risk-adjusted returns will be lower.
According to Michael Dickens, if you pick like 50 and they’re not too correlated it’s not actually all that much more risk. Which sort of makes sense—it’s like how you can accurately estimate population averages of stuff by taking a relatively small random sample and looking at the sample average.
I agree market returns are equal in expectation, but you’re exposing. yourself to more risk for the same expected returns in the “I pick stocks” world, so risk-adjusted returns will be lower.
According to Michael Dickens, if you pick like 50 and they’re not too correlated it’s not actually all that much more risk. Which sort of makes sense—it’s like how you can accurately estimate population averages of stuff by taking a relatively small random sample and looking at the sample average.