The process of selecting a portfolio may be divided into two stages. The first stage starts with observation and experience and ends with beliefs about the future performances of available securities. The second stage starts with the relevant beliefs about future performances and ends with the choice of portfolio. This paper is concerned with the second stage.

—Harry M. Markowitz (1952)

It was Markowitz who first made risk the centerpiece of portfolio management by focusing on what investing is all about: investing is a bet on an unknown future. … Markowitz’s famous comment that “you think about risk as well as return” sounds like a homey slogan today. Yet it was a total novelty in 1952 to give risk at least equal weight in the search ...

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