Tribute to Harry Markowitz

We take this opportunity to pay tribute to Harry Markowitz, the “Father of Modern Portfolio Theory,” who passed away on June 22, 2023.

Born in 1927, Markowitz obtained his bachelor’s, master’s, and PhD degrees from the University of Chicago, where he studied under economic goliaths such as Milton Friedman, and it was here that Markowitz’ impact on investing theory began.

Though some current-day investors and investment professionals may take for granted much of what Markowitz conceived, which began in earnest in 1952 with the publication of his paper “Portfolio Selection” in the Journal of Finance, it was groundbreaking work that changed the face of investing.

While the concept of diversification was previously understood from the standpoint of risk control – i.e., “don’t put all your eggs in one basket,” Markowitz took diversification from an intuitive approach to a scientific approach, creating a construct for evaluating “baskets” or “portfolios” of assets, versus one stock at a time. He showed how a systematic approach could create a portfolio with the lowest possible risk, given a certain expected return. While it may sound simple and obvious to us now, this had never been articulated and turned into an actual process of analysis before Markowitz’ work.

Markowitz’ work was widely acclaimed, earning him among other recognitions:

• The John von Neumann Theory Prize in 1989
• The Nobel Memorial Prize in Economic Sciences in 1990, shard with Merton H. Miller and William F. Sharpe.
• Being named “Man of the Century” by Pensions & Investments magazine in 1999.

At Integris, and for most if not all professional fiduciary investors, Modern Portfolio Theory is at the core of our investment philosophy.

Dr. Markowitz, thank you for your massive contribution to the science of investing.

The Integris Team

Sources: 

David Wilson, Harry Markowitz, Father of Modern Portfolio Theory, Dies at 95, Bloomberg, June 26, 2023
Brian Murphy, Harry Markowitz, Nobel economist who changed investing, dies at 95, Washington Post, June 28, 2023

See our previous tribute John Bogle, founder of Vanguard, another great investment luminary of our time.