Unhedged

Harry Markowitz found a free lunch in finance

Markowitz, a titan of finance who won the 1990 Nobel prize in economics, died last month. He showed, in a mathematically rigorous way, that diversification could bring higher returns without higher risk.  Alex Scaggs joins Ethan to explain how Markowitz’s work led to a way of thinking that has become ubiquitous in modern finance (and that has spawned legions of haters). Also, we go short economic forecasting and long Beyonce. Links:- Read Alex Scaggs’s <a href="https://www.ft.com/content/2ebd7d96-c3e3-4b69-92ac-e39bc90e8068" rel="noopener noreferrer" target="_blank">Markowitz obit in the FT</a>. For a free 90-day trial to the Unhedged newsletter go to: <a href="https://www.ft.com/unhedgedoffer" rel="noopener noreferrer" target="_blank">https://www.ft.com/unhedgedoffer</a> Follow Ethan Wu (<a href="https://twitter.com/ethanywu" rel="noopener noreferrer" target="_blank">@ethanywu</a>) and Katie Martin (<a href="https://twitter.com/katie_martin_fx" rel="noopener noreferrer" target="_blank">@katie_martin_fx</a>) on Twitter. You can email Ethan at <a href="mailto:ethan.wu@ft.com" rel="noopener noreferrer" target="_blank">ethan.wu@ft.com</a>. <a href="https://www.ft.com/content/26b094d4-f2e2-49b2-b8c7-6c7c70a75888" rel="noopener noreferrer" target="_blank">Read a transcript of this episode on FT.com</a> Hosted on Acast. See <a href="https://acast.com/privacy" rel="noopener noreferrer" style="color:grey;" target="_blank">acast.com/privacy</a> for more information.

Katie Martin, Robert Armstrong and other markets nerds at the Financial Times explain the big ideas behind what’s happening in finance right now. Every Tuesday and Thursday. Hosted on Acast. See <a href="https://acast.com/privacy" rel="noopener noreferrer" style="color:grey;" target="_blank">acast.com/privacy</a> for more information.