Post-Modern Portfolio Theory

Swisher, Pete; Kasten, Gregory W.
September 2005
Journal of Financial Planning;Sep2005, Vol. 18 Issue 9, p74
Academic Journal
This article describes the framework of the modern portfolio theory and suggests the establishment of the post-modern portfolio theory, which considers the application of downside risk optimization for asset allocation. The core innovation of post-modern portfolio theory is its recognition that standard deviation is a poor proxy for how humans experience risk. It points the way to an improved science of investing that incorporates not only downside risk optimization but also behavioral finance and any other innovation that leads to better outcomes.


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