Big Data and AI

 In this post, we explore the contributions of Harry Markowitz , an American economist who revolutionized finance by introducing Modern Portfolio Theory (MPT) in the 1950s. His ideas fundamentally changed how investors think about risk, return, and diversification . Portfolio Theory In his groundbreaking 1952 paper, “Portfolio Selection,” Markowitz showed that investors shouldn’t look at assets in isolation , but rather as part of a portfolio . The key insight? “Diversification reduces risk without necessarily sacrificing returns.” By combining assets that don’t move together (i.e., have low correlation), investors can lower the overall volatility of their portfolios. Efficient Frontier Markowitz introduced the concept of the efficient frontier — a curve representing all portfolios that offer the highest expected return for a given level of risk . Portfolios below the curve are inefficient. Portfolios on the curve are optimally diversified . This tool is still used tod...