Every Investor wants to own a perfect investment that provides them high returns but low risk. People spend a lot of time coming up with methods to craft such optimal portfolios. In this video, we explore the most popular one - Modern Portfolio Theory (MPT) - developed in the 1950s by economist Harry Markowitz, who won a Nobel prize for it. We will delve into the concept of diversification, the balance between risk and return, and the efficient frontier to understand how investors can construct portfolios that maximize returns for any given level of risk.
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Chapters
00:00 Intro
01:15 Modern Portfolio Theory
02:43 Ray Dalio on How MPT works
03:51 Harry Markowitz
04:34 Markowitz's aha moment
06:17 Efficient Frontier
07:11 Harry Markowitz Career
08:41 Criticism of MPT
11:48 Markowitz's personal portfolio
13:12 Can we use MPT?