Science Fair Project Encyclopedia
Henry Markovitz wrote two classic articles on finance, "Portfolio Selection," Journal of Finance (March 1952) and "The Utility of Wealth," Journal of Political Economy (April 1952), when he was a 25 year old graduate student at the University of Chicago.
He received the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel on 1990 for the article on portfolio selection. That work began with the premise that investors have two goals, they seek to maximize return and they want to reduce the variance of return (where variance can be understood as a proxy for risk.)
A rational investor will accomplish this, Markovitz concluded, with a diversified portfolio that combines a group of risky securities with some relatively low-risk assets.
The contents of this article is licensed from www.wikipedia.org under the GNU Free Documentation License. Click here to see the transparent copy and copyright details