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Passive Investing Theory

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Passive Investing Theory, part four: Portfolio Theory

February 20, 2013

The final part of a four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Diversification has been called 'the only free lunch in investing' and is the driver behind Portfolio Theory, developed in 1952 by Harry Markowitz and later expanded upon by the work of William Sharpe in his Capital Asset Pricing Model, and Eugene Fama and Kenneth French in their Three Factor Model. Portfolio Theory doesn't have all the answers but undoubtedly has had a big impact on how we all invest. Featuring comment from Garrett Quigley and Bernd Hanke from Global Systematic Investors.

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Jane S

The Markowitz formula is wrong. the 2s should be ^2

Martin A. Smith

Very insightful info about Passive Investing Theory, Part 4: Portfolio Theory

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