Portfolio theory vindicated by crisis, says Markowitz

One of the founders of the theory of portfolio management has defended it against widespread claims that it failed during the crisis – in fact, the crisis vindicates the theory, argues Harry Markowitz, professor of finance at the University of California, San Diego.

Portfolio theory uses the variance of assets' returns to construct portfolios that are less risky than their individual components, and introduced the concept of the "efficient frontier" at which the most return is earned on a chosen