Modern Portfolio Theory 101

            <h3>The Foundation of Modern Investing</h3>
            <p>Modern Portfolio Theory (MPT), developed by Nobel laureate Harry Markowitz in 1952, revolutionized how we think about investment risk and return. The theory demonstrates that investors can construct portfolios to maximize expected return for a given level of risk.</p>

            <h4>Key Principles</h4>
            <ul>
                <li><strong>Diversification Reduces Risk:</strong> By combining assets with different risk-return profiles, investors can reduce overall portfolio risk without sacrificing expected returns.</li>
                <li><strong>Risk vs. Return Trade-off:</strong> Higher expected returns generally come with higher risk, but efficient diversification can improve this trade-off.</li>
                <li><strong>Correlation Matters:</strong> Assets that move in different directions during market cycles provide better diversification benefits.</li>
                <li><strong>Efficient Frontier:</strong> The optimal set of portfolios offering the maximum expected return for each level of risk.</li>
            </ul>

            <h4>Practical Applications</h4>
            <p>MPT principles guide our asset allocation recommendations:</p>
            <ul>
                <li>Combining stocks, bonds, and alternative investments</li>
                <li>International diversification across markets</li>
                <li>Rebalancing to maintain target allocations</li>
                <li>Risk assessment based on individual tolerance</li>
            </ul>