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Getting Back to Business
Book

Getting Back to Business

Why Modern Portfolio Theory Fails Investors and How You Can Bring Common Sense to Your Portfolio

Daniel Peris
McGraw-Hill, 2018

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Editorial Rating

8

Qualities

  • Analytical
  • Hot Topic
  • Insider's Take

Recommendation

Markets have long recognized Modern Portfolio Theory (MPT) as the dominant governing thesis in investing. MPT advocates diversification and quantifies risk as a function of anticipated market returns. But investment expert Daniel Peris casts a critical eye on MPT. His astute examination focuses on understanding how and why the model emerged, its perceived failures, and the future of the industry’s investment approach. Peris convincingly argues that MPT has distorted the investment framework and seriously damaged stakeholders. All investors – whether beginners or pros – will find Peris’s work on a foundational element of modern investing an important addition to their reference libraries.

Take-Aways

  • Modern Portfolio Theory (MPT) transformed the investing landscape.
  • Economist Harry Markowitz published his work on MPT in 1952.
  • Its premise is that investors should diversify their assets to balance risk and return.

About the Author

Daniel Peris is a senior vice president and senior portfolio manager at Federated Investors. He is the author of The Strategic Dividend Investor and The Dividend Imperative.

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