Given the voluminous threads on this subject that have popped up I'm almost afraid to post this link. But here goes...
http://techcrunch.com/2012/08/11/is-mod ... d-come-on/
Is Modern Portfolio Theory Dead? Come On.
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Is Modern Portfolio Theory Dead? Come On.
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Re: Is Modern Portfolio Theory Dead? Come On.
I think it depends on whether you consider the typical "Large cap, Mid Cap, Small cap" versions of "diversification" to be anything but a perversion of what should be a more broad diversification of assets over a broad range of possible events.
I think there are some great ideas within MPT, and the PP is simply MPT on steroids it would seem.
I think there are some great ideas within MPT, and the PP is simply MPT on steroids it would seem.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: Is Modern Portfolio Theory Dead? Come On.
Never really understood why modern portfolio theory uses the S&P500 or other stock indices for the market portfolio. I personally think the Permanent Portfolio is a better candidate for the "market portfolio" simply by the virtue that it contains a much broader variety of assets than simply stocks.