Moving Beyond Modern Portfolio Theory: Investing That Matters (Routledge; 2021) boldly critiques Modern Portfolio Theory (MPT), the Nobel prize winning investing theory that once revolutionized the investing world, but now threatens to impoverish both investors and the real world. MPT has no mechanism to understand its impacts on the environmental, social and financial systems, nor any tools for investors to mitigate the havoc that systemic risks can wreck on their portfolios. The result is that MPT forces investors to focus on what matters least, both to them and to society.
The authors contend that MPT and the myriad of simplifying assumptions that enable and amplify it have become myths: Easy to understand, powerful in their explanatory power, and wrong. Self-referential capital market benchmarks become false goals, resulting in a financial system misaligned from the real-world needs of investors, society and the economy. It’s time for MPT to evolve.
About the Book →Moving Beyond Modern Portfolio Theory: Investing That Matters (Routledge; 2021) boldly critiques Modern Portfolio Theory (MPT), the Nobel prize winning investing theory that once revolutionized the investing world, but now threatens to impoverish both investors and the real world. MPT has no mechanism to understand its impacts on the environmental, social and financial systems, nor any tools for investors to mitigate the havoc that systemic risks can wreck on their portfolios. The result is that MPT forces investors to focus on what matters least, both to them and to society.
The authors contend that MPT and the myriad of simplifying assumptions that enable and amplify it have become myths: Easy to understand, powerful in their explanatory power, and wrong. Self-referential capital market benchmarks become false goals, resulting in a financial system misaligned from the real-world needs of investors, society and the economy. It’s time for MPT to evolve.