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Money Management  |  APR 1996

The Benefits of Diversification by Lars N. Kestner

The Benefits of Diversification by Lars N. Kestner The question of how to increase returns while decreasing risk has fascinated investors for decades; after all, the goal is of trading or investing is to maximize return per unit of risk accepted. Here's an introduction to the benefits of diversification. The first major progress in portfolio management was made by Harry Markowitz, 1990 Nobel Prize co-winner in economics. Some 40 years ago, Markowitz began asking questions on the nature of risk and reward. Looking at streams of cash flows, he attempted to quantify the relationship through mathematics. Simply put, Markowitz began by pondering the following question:

by Lars N. Kestner

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