I will always prefer individual stocks.
I am not concerned about diversification risk, I prefer the risk of owning more stocks when I feel the marktet is cheap and less when I feel it is overpriced. Owning funds inevitably leads to one agreeing they can never know anything about the market other than it will always go up. I do not, can not, will not believe that. If I am going to live the rest of my life on my investments I will assume that responsibility myself.
The risk of stocks held is offset by my fixed portion of the portfolio. Market return is a nice number by what is it? The S&P 500, Russell 1000, 20000, 5000? The US total stock market? The world stock market? A global portfolio? The target date portfolio?
If one truly understands investments well enough to insure their life savings and future with them, picking individual stocks should be a continual part of the portfolio review.
My main goal is to earn a return in excess of inflation by 4% minimum.