
 FPA Journal  PostModern Portfolio Theory 
  Modern portfolio theory (MPT) and its meanvariance optimization (MVO) model for asset allocation are Nobel Prizewinning theories of global equilibrium, but are unreliable for the primary task to which the financial services industry applies them—building portfolios. 
  In 1959, Harry Markowitz, the "father of modern portfolio theory," published Portfolio Selection,² in which he proposed that investors expect to be compensated for taking additional risk, and that an infinite number of "efficient" portfolios exist along a curve defined by three variables: standard deviation, correlation coefficient, and return. 
  Focus, therefore, on the conclusions as to which portfolios are riskier and not on the obviously different shapes of the curves. 
 www.fpanet.org /journal/articles/2005_Issues/jfp0905art7.cfm (4517 words) 
