Ep. 1: Harry Markowitz · 1952 — Portfolio Selection

from Finance Papers Hosted by Luiz Gidrão, CFA, CAIA

In 1952, a 25-year-old graduate student published a 14-page paper that changed Wall Street forever. Harry Markowitz’s "Portfolio Selection" laid the mathematical foundation for modern quantitative finance and earned him a Nobel Prize. In this inaugural episode of Finance Papers, we strip away the fluff and do a section-by-section deep dive into the actual math and mechanics of Markowitz's original text. Key Topics Covered: The Concentration Trap: Why trying to purely maximize returns mathematically forces you to put 100% of your money into a single stock. The Myth of Large Numbers: Why holding 60 railway stocks isn't true diversification when a systemic market crash hits. The Magic of Covariance: How the interaction between assets—not their individual volatility—defines true portfolio risk. The Computing Bottleneck: How the sheer impossibility of calculating 125,000 covariance pairs by hand in 1952 eventually led to the creation of Beta and CAPM. The Math of Gambling: Why rational humans willingly buy lottery tickets (the statistical concept of Skewness). Paper Explored: Markowitz, H. (1952), PORTFOLIO SELECTION*. The Journal of Finance, 7: 77-91. 🔗 Read the full paper here: https://doi.org/10.1111/j.1540-6261.1952.tb01525.x Finance Papers is conceptualized and curated by Luiz Gidrão, CFA, CAIA (founder of stock.cash and goa.capital). Hit play, open the paper PDF, and learn with us.

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Ep. 1: Harry Markowitz · 1952 — Portfolio Selection

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How long is this episode of Finance Papers?

This episode is 44 minutes long.

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This episode was published on June 29, 2026.

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