[Dazarath]

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What's the rationale for having both index funds and individual stocks? Either you expect your picks to beat the market or you don't. I see no strong reason for straddling the fence. Reduction of risk isn't a good argument in this case. Do you see why?

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If you expect it to take you x hours/week (on average) to do thorough research for a single stock, then it will take you some Cx hours (not necessarily linear) to do research on multiple stocks. Someone may have enough time to cherry pick a stock or two on their own, but not enough to research enough stocks for an entire portfolio, no?

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I think anyone who spends some time studying the stock market will realize that your highest expected return is certainly not in index funds.

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No one is saying this isn't true. The problem isn't that we think index funds are unbeatable. The problem is that you basically want to open up the newspaper a couple times a week and somehow magically beat the market as a result, something that many professionals who work full-time at can't even achieve.