Modern Portfolio Theory is the predominant paradigm under which your financial portfolio is being managed, so why do the world’s top investors disagree with it? In this video, I discuss Modern Portfolio Theory, whether price is always equal to value, and if you have to increase your risk in order to increase your returns.
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Too brief about MPT
only idiots who failed to regard stocks as businesses saw risks = volatility…risks come from not knowing what you are doing!
Seems like you're talking about Efficient Market Hypothesis and not the Modern Portfolio Theory. In Modern Portfolio Theory, combination of assets which do not completely correlate can be mixed into a single portfolio to lower volatility for a given expected return.
Hi! Could you share the BBC talk link? Thanks
MPT is great. But it's great that investors take different actions in the market so I obviously welcome it.
Thanks!
Buffet's stated intention to have the excess cash of BH invested in three low cost, diversified ETFs suggests to me that he subscribes to at least a portion of MPT that would argue that paying an expensive hedge fund manager to pick stocks, take bets on the market and try to time when to get in/out of the market is a fool's game. For most people, matching asset allocation with risk profile and investment horizon, while keeping costs low, with periodic rebalancing when markets and personal situations change, produces optimal long term investment returns. It's just not as glamorous sounding as running a hedge fund. And…active fund managers' track records versus their indices (not good) tells the story by itself.
Watching your video makes it clear you don't understand MPT.
I as one of successful value investors in Korea for about 8 years, can say this with absolute confidence: price is not value, and volatility is not risk.
Hello, I found your channel today and I took a glance at your video list and was amazed. I've only seen two of your videos and I am very impressed. You have a breath of information included in your channel and you are probably the most intuitive teacher I have ever seen.
Currently, I study finance in my senior year and I have been all over youtube looking at various lessons from MIT, Yale, and so on… you channel is by far the best. You got a new subscriber! Keep up the good work!