Modern portfolio theory concludes that an optimized portfolio generates an optimal return given what the investor is willing to optimized. Modern portfolio theory (MPT) is a realistic strategy for picking investments to optimize their overall returns while maintaining an acceptable degree of risk.
This idea was pioneered by American economist Harry Markowitz in his work "Portfolio Selection," which was published in the Journal of Finance in 1952. He was later given the Nobel Prize in economics for his contributions to modern portfolio theory. Diversification is an important component of the MPT theory. The majority of investments are either high high return or low poor return.
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