Lisa R. Goldberg is an adjunct professor of statistics at the University of California, Berkeley, and director of research at Aperio Group, Sausalito, California.
The “invisible hand” of the free market can hurt as well as help participants. The authors, who are Nobel Prize–winning economists, argue that as long as there is profit to be made, sellers will exploit our psychological and behavioral weaknesses through manipulation and deception.
Drawing on his own prior research and that of others, Harry M. Markowitz addresses the objections to mean–variance analysis, concluding that it is central to finance for good reason. He proceeds from a set of incontrovertible premises to the conclusion that mean–variance analysis is the best tool available for addressing a wide range of portfolio-construction problems.