RETHINKING MODERN PORTFOLIO THEORY
[?]
Submitted by The Capital Spectator
The investment universe is filled with surprises, and perhaps the biggest shocker of all is the idea that the value strategies of Ben Graham and his disciples are in general agreement with modern portfolio theory (MPT).
Granted, it sounds absurd. MPT, after all, is the suite of financial theories that spawned index funds and the view that market prices are the best estimate of intrinsic value. Meanwhile, Graham’s value strategy asserts the opposite, advising that savvy investors on the hunt for bargains can do a better job of calculating fundamental value, a strategy that boosts the odds of generating market-beating returns.
