Modern portfolio theory

Portfolio Management: Markowitz, CAPM, and Modern Portfolio Theory

Up until now in Wilmott’s book, we have been hedging everything. Buy a derivative, hedge with the underlying, pocket risk-free returns. Banks love it. But not everyone plays that game. Fund managers buy and sell assets trying to beat the bank rate. They take risk on purpose. Chapter 18 is about doing that intelligently.

Modern Portfolio Theory: Your New Best Friend

Chapter 8 opens Part Three of the book, titled “The New Investment Technology.” We’re leaving behind the debate over whether analysts can predict stock prices. Now we’re entering the world of academic theories that actually changed how professionals invest.