[trader220]

As a former institutional trader I have enjoyed reading this thread on and off for a while.

The same debates go on in all circles, meaning I see similar threads on other forums I subscribe to.

There are some "givens" or very close to it. Fund managers are not going to consistently outperform the SanP 500, and past performance is surely not a guarantee of future performance.

The rest is up to you but keep a couple things in mind. What is your goal? What is your time horizon? With those two in mind figure out your risk tolerance.

The interesting thing about the modern markets... and to me "modern" started about 10 years ago with the proliferation of ETF's and derivatives on ETF's... the byproduct of which is measurably lower volatility in the market. Look at a 20 year chart of the VIX (SandP 500 VIX). What passes for high volatility these days was considered pretty low 7 to 10 years ago. There are so many more layers in which institutions can hedge or lay off risk now, that the overall risk in the market has become diluted.

I am not a stock picker, at least not a very good one, I have never had to be. I own about a dozen individual names but for the most part I am not in them because of my own research. I chose them because of my ties to the company or institutions who I maintain a relationship with are deep into them. Other than that as far as equities, I am in a number of ETF’s.
Having been a derivatives trader for 20 years I still have a large % of my net liq in a portfolio which is basically a series of options plays with either ETF’s or Futures as the underlying and hedge.