Diversification? Lowering single-company risk? Ability to trade in and out of particular sectors nimbly, or short them?
Diversification is a huge negative - one of the biggest mistakes that Canadians have been sold by the fund industry. Another reason Canadian investors do poorly is the ease at which they can "trade in and out". The combination of these two factors along with frictional costs (taxes, fees, commissions, etc.) virtually assures mediocrity.
With regards to diversification:
"I was suffering from my chronic delusion that one good share is safer than ten bad ones, and I am always forgetting that hardly anyone else shares this particular delusion." - John Maynard Keynes, 1942
"The strategy we've adopted precludes our following standard diversification dogma. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort-level he must feel with its economic characteristics before buying into it." - Warren Buffett, 1993 Chairman's Letter to Shareholders
"I have owned one stock since 1969, two since 1988 and one I started buying in 1986 or so. That's my portfolio. Six stocks. I once owned 17, but that was way too much." - Philip Fisher, Forbes
With regards to "trading in and out":
"All intelligent investing is value investing - to acquire more than you are paying for. Investing is where you find a few great companies and then sit on your ***. - Charlie Munger at Berkshire Hathaway's 2000 Shareholder Meeting
"Charlie and I decided long ago that in an investment lifetime it's too hard to make hundreds of smart decisions. Therefore, we adopted a strategy that required our being smart - and not too smart at that - only a very few times. Indeed, we'll now settle for one good idea a year. (Charlie says it's my turn.)" - Warren Buffett
Single-company is a risk if one chooses a company in poor financial health. Definately.
The skill of successful shorting is far beyond the ability of an ETF investor.
There would be absolutely 0% chance that our finances would be where they are if we believed in diversification and the 'benefits' of trading in and out - because there are none.