A portfolio manager needs to pick winners - assets or securities with high expected returns and low risk. What is wrong with this statement?

High returns and low risks are basically opposites. In addition, no one can accurately predict the future.

While it is true that a portfolio manager aims to select assets or securities with high expected returns and low risk, there is a fundamental flaw in the statement. The flaw lies in the assumption that one can consistently identify "winners" in the market. This assumption overlooks the inherent uncertainty and unpredictability of financial markets.

In reality, it is extremely challenging to consistently predict which assets or securities will outperform others with high certainty. The market is influenced by various factors, including economic conditions, geopolitical events, and investor sentiment, which are difficult to accurately forecast.

Furthermore, there is often a trade-off between risk and return. Higher expected returns typically come with a higher level of risk, meaning that attempting to minimize risk without compromising returns can be a complex task.

Instead of focusing solely on picking winners, a more realistic approach for a portfolio manager would be to construct a well-diversified portfolio that aligns with the investor's goals, risk tolerance, and time horizon. This involves spreading investments across different asset classes, sectors, and regions to reduce the impact of individual security performance on the overall portfolio. Additionally, regular monitoring, risk management strategies, and periodic rebalancing can help ensure the portfolio remains aligned with the investor's objectives.