How Harry Markowitz Revolutionized Investing with Modern Portfolio Theory
In 1952, American economist Harry Markowitz introduced Modern Portfolio Theory (MPT), the premise behind a groundbreaking investment strategy that emphasized the structure and performance of an entire portfolio rather than individual stocks. With its Efficient Frontier of asset diversification and its novel approach to risk correlation, MPT fundamentally changed how individuals and institutions manage investments. Markowitz, along with William F. Sharpe and Merton Miller won the 1990 Nobel Memorial Prize in Economic Sciences. The Nobel Committee cited Markowitz’s theory of asset choice as the “first pioneering contribution in the field of financial economics.” MPT has influenced many investment tools and strategies, including the…
