Final answer:
In comparing investment strategies, a hands-on, informed approach is likely to yield better results than one that relies on random selection and neglect. Diligent management can potentially lead to outperforming benchmarks, while an inattentive approach risks instability and missed opportunities.
Step-by-step explanation:
When comparing investment portfolios, it's crucial to consider the approach taken by the investors in selecting and managing their investments. In the scenario where you are monitoring your selections, tracking prices, current events, and company actions, your portfolio is likely to perform better than if you had made selections randomly and failed to stay informed. On the other hand, your friend who chooses companies randomly and does not monitor the investments is more likely to experience a more volatile performance, potentially missing opportunities to respond to market changes or company developments. While it is possible for a random selection of companies to perform well in the short term due to market fluctuations, over time, a diligent investment strategy generally outperforms a lackadaisical or uninformed approach. A portfolio that is carefully managed with an eye on financial news and other relevant factors typically has a higher chance of beating its benchmark compared to one that is neglected.