Who is '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.
Next Up
BREAKING DOWN 'Harry Markowitz'
Prior to Markowitz's theories, emphasis was placed on picking single highyield 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

Homogeneous Expectations
An assumption in Markowitz Portfolio Theory that all investors ... 
Modern Portfolio Theory  MPT
A theory on how riskaverse investors can construct portfolios ... 
Markowitz Efficient Set
A set of portfolios with returns that are maximized for a given ... 
BlackLitterman Model
An asset allocation model that was developed by Fischer Black ... 
William F. Sharpe
An American economist who won the 1990 Nobel Prize in Economics, ... 
Merton Miller
A prominent Chicago school economist. Miller was born in 1923 ...
Related Articles

Markets
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves. 
Investing
The History Of The Modern Portfolio
Learn how the writings of John Burr Williams and Harry Markowitz led to the creation of the investment portfolio. 
Investing
Understanding Modern Portfolio Theory
Modern portfolio theory describes ways of diversifying assets in a portfolio in order to maximize the expected return given the ownerâ€™s risk tolerance. 
ETFs & Mutual Funds
The Evolution of ETFs
Key 20thcentury financial theories changed the way investors viewed markets and created the circumstances in which ETFs could emerge. 
Trading
Modern Portfolio Theory: Why It's Still Hip
See why investors today still follow this old set of principles that reduce risk and increase returns through diversification. 
Managing Wealth
Manage Investments And Modern Portfolio Theory
Modern Portfolio Theory suggests a static allocation which could be detrimental in declining markets, making it necessary for continuous risk assessment. Downside risk protection may not be the ... 
Trading
Modern Portfolio Theory vs. Behavioral Finance
Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ... 
Trading
7 Controversial Investing Theories
We take a closer look at the theories that attempt to explain and influence the market. 
Investing
Portfolio Diversification, Done Right
Diversifying your portfolio by means of different securities and asset classes is an essential approach to lower the overall risk of a portfolio. 
Managing Wealth
The Workings Of Equity Portfolio Management
Achieve analytical efficiency by applying your evaluation to a key set of stocks.
RELATED FAQS

Where did Modern Portfolio Theory (MPT) come from?
Learn about modern portfolio theory, or MPT, and its origins. MPT has become a standard paradigm through which investors ... Read Answer >> 
How is portfolio variance reduced in Modern Portfolio Theory?
Learn about modern portfolio theory, specifically what it asserts about asset allocation and managing portfolio risk through ... Read Answer >> 
How is correlation used in modern portfolio theory?
Discover how modern portfolio theory and the efficient frontier use correlation between investment assets to predict an optimal ... Read Answer >> 
What level of correlation among investments will guarantee market returns but have ...
Learn how modern portfolio theory uses correlation to determine the efficient frontier for which assets to include in a portfolio ... Read Answer >> 
How do investment advisors calculate how much diversification their portfolios need?
Learn how modern portfolio theory (MPT) can help determine a diversified mix of assets for inclusion in a portfolio that ... Read Answer >> 
What types of assets lower portfolio variance?
Learn what type of assets reduce portfolio variance and how modern portfolio theory uses correlation coefficients. Read Answer >>