Markowitz’s Modern Portfolio Theory: What Investors Get Wrong

In its simplest interpretation, Harry Markowitz’s modern portfolio theory demonstrates that greater risk is positively correlated with return and thus greater risk provides investors with a greater return.

Yet numerous research papers, including research by S&P Dow Jones Indices, show that this just isn’t true. In fact, higher-risk equities tend to produce lower investment returns versus lower-risk equities over full market cycles.

Read more through this article published by Bryce Sutton, Managing Director, Summit Global Investments


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