CHAPTER 4
THE PENSION PROTECTION ACT OF 2006: 401(K) SAVINGS BECOMES A SYSTEM
Do what you can, where you are, with what you have.
To understand how the Pension Protection Act of 2006 changed key practices in retirement savings, we should step back a moment to first look at the investment theory that helped to drive these changes.
Modern Portfolio Theory
Modern portfolio theory (MPT), the master doctrine behind most of today’s asset management practice, was born in the early 1950s with the publication of a seminal paper, “Portfolio Selection,” in the Journal of Finance, written by a then-unknown analyst named Harry Markowitz. The paper proved to be one of the most influential financial monographs of all time. In a nutshell, ...
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