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Investing Like A Nobel Laureate

February 11, 2020

As most of my readers know, our fundamental approach to investing is guided by specific principles (for which their creators received a Nobel Prize), namely: a passive approach (except where client circumstances dictate otherwise), Modern Portfolio Theory (MPT, mostly related to diversification) and the Fama/French three factor (now four factors) model.

I didn't want to use this as a introduction to the sausage making of portfolio construction but some recent news has led me to this particular piece. As most are aware, I have been associated with MatsonMoney (MM) since 1991 (and have known and associated with both Mark Matson and his father Joe for many years before then).

As our investors know, there is an academic board of advisors associated with MM which help to guide their investment management and policy. Among them: Dr. Art Laffer, Dr. Lyman Ott and Dr. Terence O'Dean. Recently, a literal academic/investment "superstar" has agreed to join the board: Nobel Laureate Dr. Harry Markowitz.

Dr. Markowitz received his Nobel Prize for economics, which was the first awarded for work in financial economics in 1990 and rewarded him for his Modern Portfolio Theory. MPT, without getting into all of the complex mathematics it relates to asset class diversification and using non-correlated assets (in plain English, meaning stock prices not moving in the same direction at the same time) to both lower the overall risk in a portfolio while, at the same time, increasing it's long-term expected rate of return. For us, this is fundamental investing 101.

Recently, Mark visited with Dr. Markowitz to interview him and that brief visit is provided below in an excerpted 10 minute interview. It is on YouTube and is well worth the time for any investor to view. The link is provided below.


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Frederick C Taylor
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