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The Big Investment Lie by Michael Edesess

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11The Simple Rules of Nobel Prize Winners

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In this chapter and the next, I will explain the Nobel Prize–winning theories that are supposed to form the basis for the advice given to customers of investment advisors and managers.

As we shall see, however, these theories underpin Strategy 1—the simple, low-cost strategy—not Strategy 2, the expensive addition that consultants, advisors, and managers tack on so that they can charge high fees.

Markowitz’s Theory: Don’t Put All Your Eggs in One Basket

When Harry Markowitz started thinking about investments in the late 1940s, he was a student at the University of Chicago selecting an area in which ...

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