Final answer:
The diligently managed portfolio is more likely to have better performance due to informed decision-making and market responsiveness, while the casually managed portfolio might be subject to higher risks and potentially lower returns due to lack of attention and randomness in company selection.
Step-by-step explanation:
Investing in the stock market involves both knowledge and attention to detail. When comparing two portfolios, where one is managed by an investor who is diligent in monitoring their selections and stays updated with financial news, and the other is managed by an investor who selects companies randomly and ignores market developments, there can be significant differences in their performances by year-end.
The diligent investor's portfolio is likely to be better adjusted to market conditions. They may avoid companies with negative outlooks or capitalize on market opportunities as they arise. This could result in stronger performance and potentially higher returns. However, it's important to note that the stock market can be unpredictable and even well-researched investments can diminish in value.
On the other hand, the casual investor's portfolio, lacking in research and management, may suffer from a lack of informed decision-making. This could lead to investments in companies that do not perform well or are not aligned with market trends. Without active management, the portfolio could be exposed to unnecessary risks, possibly resulting in poorer performance compared to the diligent investor's managed portfolio.