Discuss how is each comment flawed or correct

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Reference no: EM131902247

Consider the following conversation and discuss how is each comment flawed or correct, and what would you tell these people to straighten them out?

Helen says: “When forming a portfolio, I would want to choose stocks from different industries. If I choose 4 stocks from different industries my portfolio will be diverse. I would then expect to have performance similar to the market portfolio as measured by the S&P 500.”

Sophia’s reply is “If you want to replicate the market, you’re better off buying a mutual fund like the Vanguard 500 Index fund. It is managed by a professional stock picker, and therefore will always do better than the S&P 500 for the same level of risk.”

Reference no: EM131902247

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