Portfolio Theory

Passive Investing Theory, part four: Portfolio Theory

The final part of a four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Diversification has been called "the only free lunch in investing" and is the driver behind Portfolio Theory, developed in 1952 by Harry Markowitz and later expanded upon by the work of William Sharpe in his Capital Asset Pricing Model, and Eugene Fama and Kenneth French in their Three Factor Model. Portfolio Theory doesn't have all the answers but undoubtedly has had a big impact on how we all invest. Featuring comment from Garrett Quigley and Bernd Hanke from Global Systematic Investors. Courtesy of Sensible investing.tv.

 

 

Market Efficiency

 

Passive Investing Theory, part three: Market Efficiency

Part three of a four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Market Efficiency - the theory that markets reflect all available information - was explored in Eugene Fama's Efficient Market Hypothesis in the 1960's, but has its roots a century earlier in the 19th century mathematician Sir Francis Galton's observations on "the wisdom of the crowd" and "regression to the mean;" and later in the work of Nobel Prize-winning Austrian Economist Friedrich Hayek on stock prices. With comment from Tim Hale and Patricia Chelley-Steeley. Courtesy of Sensible investing.tv.

 

 

The Random Walk

 

Passive Investing Theory, part two: The Random Walk

Part two of a four-part series exploring the foundations of passive investing and the men who brought it to global significance. Part two describes the Random Walk theory: the belief that share prices are not predictable as they are based on reaction to information that is being fed into the market completely randomly. The observations of Jules Regnault and Louis Bachelier in the late 19th century, built upon by figures such as Paul Samuelson and Burton Malkiel still hold true in our 21st century economy. Featuring contributions from Bernd Hanke, Prof Patricia Chelley-Steeley and Jeffrey Molitor. Courtesy of Sensible investing.tv.

 

 

Investing vs. Speculating

 

Passive Investing Theory, part one: Investing vs. Speculating

A four-part series exploring the foundations of passive investing and the men who have brought it to global significance. Part one investigates one of the key fundamentals of passsive investing; recognizing the difference between investing and speculating, and short-term and long-term strategies. Including studies of Benjamin Graham, Warren Buffett, and Vanguard founder John Bogle. With comment from Tim Hale and Jeffrey Molitor. Courtesy of Sensible investing.tv.