In theory there is no difference between theory and practice. But in practice there is.

—Yogi Berra

We are all conditioned to appeal to the academic for understanding and guidance on most, if not all, complex ideas. In economics, Milton Freidman, F.A. Hayek, and John Maynard Keynes are names many turn to. For investments, Harry Markowitz, William Sharpe, and Burton Malkiel start the list.

The global institutional investment industry is based on the Capital Asset Pricing Model (CAPM), Mean-Variance Optimization (MVO), and Modern Portfolio Theory (MPT). Developed or expanded by outstanding academics (Markowitz, Sharpe, Eugene Fama, and others), these theories and their expansions are elegant easily learned, and provide a theoretical ...

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