Harry Markowitz

AAA

DEFINITION of 'Harry Markowitz'

A Nobel Memorial Prize winning economist who devised the modern portfolio theory in 1952. Markowitz's theories emphasized the importance of portfolios, risk, the correlations between securities and diversification. His work changed the way that people invested.

INVESTOPEDIA EXPLAINS 'Harry Markowitz'

Prior to Markowitz's theories, emphasis was placed on picking single high-yield stocks without any regard to their effects on portfolios as a whole. Markowitz's portfolio theory would be a large stepping stone towards the creation of the capital asset pricing model.

RELATED TERMS
  1. Multiple Discriminant Analysis ...

    A statistical technique used to reduce the differences between ...
  2. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  3. Risk

    The chance that an investment's actual return will be different ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments ...
  5. Mutual Fund Theorem

    An investing theory, postulated by Nobel laureate James Tobin, ...
  6. Markowitz Efficient Set

    A set of portfolios with returns that are maximized for a given ...
Related Articles
  1. Achieving Optimal Asset Allocation
    Investing Basics

    Achieving Optimal Asset Allocation

  2. 6 Asset Allocation Strategies That Work
    Options & Futures

    6 Asset Allocation Strategies That Work

  3. Nobel Winners Are Economic Prizes
    Options & Futures

    Nobel Winners Are Economic Prizes

  4. The Capital Asset Pricing Model: An ...
    Fundamental Analysis

    The Capital Asset Pricing Model: An ...

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center