Modern Portfolio Theory

To an investor, the Modern Portfolio Theory is very important. Here are some key points:

1. Harry Markowitz won Nobel Peace Prize in Economics in 1990 for his theory published in 1950.
2. A key component is the Principal of Co-Variance: Risky higher returning investments, each having their own variance, when combined in certain amounts will have an overall lower amount of risk and maintain higher returns.
3. An example of how to apply this principal is a blend of International and US Equities give a better return and lower risk than just US Equities alone.
4. Why is this important? Because money moves between stocks and bonds and between different parts of the world.

Why is this important? By using the Principal of Co-Variance a higher return can be obtained by using different investments at a given risk level. Making more money and having less risk is always a good thing.

Is anyone smart enough to know the right time to make moves? NO

What is the best thing to do: Diversify, Diversify, Diversify