Appendix A

For the brave: portfolio theory and the rational investor

Writing about portfolio theory is probably even less fun than reading about it, but this part is important so stay with me if you are interested in the theory behind this book. You should know that the investing style and portfolio construction in this book is not something I have come up with. It is a practical implementation of the generally acknowledged most advanced theory on the subject. Implementing advanced portfolio theory in the real world gives us the best possible portfolio and is actually very easy and logical for someone that does not have an edge on the markets.

The foundation of portfolio theory is that you have a riskless investment that you can optimally ...

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