We're using cookies, but you can turn them off in your browser settings. Otherwise, you are agreeing to our use of cookies. Learn more in our Privacy Policy

Bridge over ocean
1 March 2003 Financial Analysts Journal Volume 59, Issue 2

Single-Period Mean–Variance Analysis in a Changing World (corrected)

  1. Harry M. Markowitz
  2. Erik L. van Dijk

Ideally, financial analysts would like to be able to optimize a consumption–investment game with many securities, many time periods, transaction costs, and changing probability distributions. We cannot. For a small optimizable version of such a game, we consider in this article how much would be lost by following one or another heuristic that could be easily scaled to handle large games. For the games considered, a particular mean–variance heuristic does almost as well as the optimum strategy.

Read the Complete Article in Financial Analysts Journal Financial Analysts Journal CFA Institute Member Content