Otabek

My point is that in all of these situations, there is a freebie baseline, that doesn't suddenly disappear if you're "trying" rather than guessing.

Another example:

The return performance of a large-cap PASSIVE portfolio manager is expected to be on-par with the return of the S&P 500. The passive manager is not trying to beat this expected performance.

A large-cap ACTIVE manager on the other hand is trying to add value -- in other words, he's "trying" to select superior securities. Should we benchmark him against a 0% return because he's "trying"? Nope. The performance of the S&P is still the baseline; and he only is considered a knowledgable/skilled portfolio manager to the extent that he beats the S&P.

To summarize: same baseline applies, whether you're accepting the expected baseline performance, or trying to beat it.