June 27, 2023
Harry Markowitz, a giant in modern finance, passed away last week. In 1952, while sitting in the University of Chicago library, he had a lightbulb moment: Investors should be concerned about the uncertainty, risk, or standard deviation of their investments as much as they are about the expected return. This simple idea revolutionised the field of finance and led to the development of modern portfolio theory (MPT). MPT is the foundation of almost all modern investment strategies, including those arranged by Lexington Wealth and Lexo, and it is all thanks to Harry Markowitz.
His work has had a profound impact on the way we invest today. Before Markowitz, investors would simply choose individual stocks based on their expected return. However, Markowitz showed that it was more important to consider the risk of each stock as well. By combining stocks with different levels of risk, investors could create portfolios that were both profitable and less risky.
Markowitz’s work is still relevant today. As the financial markets become more complex, it is more important than ever to understand the risks involved in investing. Markowitz’s Modern Portfolio Theory (MPT) provides a framework for doing just that.
He was a true visionary, and his work will continue to shape the field of finance for years to come. We are all grateful for his contributions, and he will be deeply missed.
Here are some additional details about Markowitz’s work:
Markowitz was a true pioneer in the field of finance, and his work has had a profound impact on the way we at Lexington Wealth and Lexo invest today. He will be remembered as one of the most important figures in the history of finance.