Which of the following sources of a portfolio's return should even out over the long term?

The concept that relates to the question revolves around the idea of how different factors contribute to a portfolio's return over time. In this context, "luck" refers to random fluctuations or outcomes that can temporarily influence a portfolio's performance. Over the long term, these random elements are expected to balance out.

When assessing returns, it's important to understand that while a portfolio could experience a lucky streak—yielding higher than usual returns due to market timing or specific investments—these effects are often transient. As time progresses, the impact of luck tends to diminish, leading to more consistent performance reflective of underlying skills and market conditions.

In contrast, skill and market return are likely to have a more persistent influence on the portfolio's performance. Skill represents the manager's ability to make informed investment decisions, while market return reflects the overall performance of the investment environment. Portfolio risk, on the other hand, remains inherent to the investments made, and does not simply even out over time; it can lead to both higher potential returns and greater losses.

Thus, the notion that luck would even out over the long term is a key reason for understanding the different contributors to returns and emphasizes the importance of focusing on skill and market performance for consistent investment outcomes.