Summary: What is risk? Base jumpers. Photo: Christophe Michot. Souce: Wikipedia In 1952 Harry Markowitz changed the world. By combining different assets he proved that a diversified portfolio would have a lower variance. His mathematical formula used the variance of asset prices around an average as a proxy for risk. It made sense at the time: the more asset prices jump around, the more nervous people get. Markowitz’s work was ground-breaking. Never before had risk been so clearly […]
