Many of the investing principles we use in our portfolios today are related to a concept called modern portfolio theory. This concept was first introduced by Nobel Laureate Harry Markowitz in a paper written in 1952. In today’s episode, Grant dives into the history of modern portfolio theory, the benefits of implementing this concept, three golden rules we can derive from the modern portfolio theory, and how you can implement these three rules in your portfolio.
[02:15] History of Investment Strategies – Grant dives into how portfolio management evolved over several decades and how it influenced the investment arena.
[06:55] The Scientific Method – How financial professionals started to utilize the scientific method for investing.
[10:05] Modern Portfolio Theory – Grant reviews what constitutes modern portfolio theory and how to build a portfolio that complies with the modern portfolio theory.
[16:03] Stocks & Other Assets – Why your decision about how much of your portfolio to be in stocks versus anything else is the most significant decision you will ever make.
[18:00] Risk & Return – How risk and return characteristics of different investment types affect the performance of a portfolio.
[21:54] Diversification – How to use diversification to your advantage and why diversification is beneficial for you.
[28:24] Long-term Consistency – How consistency can improve the performance of your portfolio.
Modern Portfolio Theory: investopedia.com/terms/m/modernportfoliotheory.asp
Ep #46: A Beginner’s Guide to Factor Investing: growmoneybusiness.com/podcast/x9ykf9576e352jd-xs3l5-l355n-pc3nj-4l3tz-fsye7-g9gha-tdcyt-b7r9a-wja6y-ksbz4-9nlgl