"No more gut feeling" — that is one of quirion's guiding principles today. No more gut feeling: that was probably exactly what Harry Markowitz was thinking too — though as long as 65 years ago. The US economist had had enough of wild speculation on the trading floor and the irrational hope of pulling off one big coup.
To this day, the now 90-year-old professor from Chicago remains a pioneer of the financial industry. He laid the foundation for this with his essay on the fundamentals of his portfolio theory. Markowitz looked at three factors of an investment: the return opportunities, the risk, and above all how an investment performs compared with the other investments in the portfolio.
The mix is what matters
The capital markets researcher wanted to calculate the optimal blend of investments on a scientific basis and to align the holdings in the portfolio accordingly: the aim was to combine the holdings in the portfolio in such a way that their return prospects were tied to different conditions. In this way, possible losses in one area were offset by gains in another.
His credo: with a well-diversified portfolio, you can contain the risk of an investment. Beyond that, he worked scientifically to identify the optimal mix of equities and low-risk investments and to keep the fluctuations of the portfolio as small as possible relative to the expected return. This allowed him to assemble portfolios that, through diversification, generate the best possible returns.
Over the years, Markowitz's theory has been refined further. But its cornerstones remain the basis of many investment strategies to this day. quirion, too, relies on a scientifically grounded investment model far removed from speculative stories. Our investment experts minimize risk through broad, worldwide diversification of investments. Which risk swings of the portfolio are accepted can be individually controlled according to our clients' preferences. In that spirit: no more gut feeling!
