Matt Levine’s Money Stuff: You Don’t Need to Pick the Stocks

More funds than stocks

If you are a good smart quantitative investor, you have a model that tells you what stocks to buy. You’ll buy more shares of the stocks that have high probabilities of going up a lot, and fewer shares of the stocks that have lower probabilities of going up less, and you’ll short shares of companies that have high probabilities of going down a lot. You will have a complete, probabilistic world view that can be expressed by some linear combination of shares of all of the available stocks.

If you’re just a regular old investor, the ...