The Toxic Side of Mutual Funds
Did the Nobel Prize-winning work of Harry Markowitz unwittingly contribute to the rise of common ownership today?
Date: First Quarter 2017
Tags: Harry Markowitz, portfolio, mutual fund, common ownership, index fund
In his classic 1952 paper, "Portfolio Selection," financial economist Harry Markowitz developed what is known as "modern portfolio theory." The success of Markowitz's ideas brings us to our current situation: mutual fund companies -- namely, BlackRock, Vanguard, State Street and Fidelity -- are now the world's largest asset managers; and hence a rise in common ownership issues.