on your last point, it depends heavily on the underlying distribution. the more skewed it is, the riskier Nancy’s approach becomes, but arguably only at insane extremes of a handful of investments driving the entirety of index performance and not because Peter’s approach is intrinsically better - rather because “buying the index” becomes the best approach in that case if you have no skill in weeding out losers.

tbh though, this isn’t supposed to lend itself to specific investment advice, but more to draw attention to coherent ways of thinking about investment edge. in our experience (and I think just a priori too) it is highly counterintuitive to people that “being really good at picking winners” is actually a bad strategy. it’s essentially a blindness to opportunity cost because nobody cares about the absolute number of winners you picked; what matters is portfolio construction.

you should be really good at picking losers, because that way you *just will* have a higher allocation to winners.