Markowitz

Markowitz’s approach, known as Modern Portfolio Theory, helps investors balance risk and reward by selecting a mix of investments. It shows that by diversifying—spreading money across different assets—you can reduce overall risk without necessarily sacrificing returns. The theory uses mathematical models to identify the best combination of investments that offers the highest expected return for a given level of risk or the lowest risk for a desired return. This strategic balancing aims to maximize investment efficiency and manage uncertainties in the financial markets.