Modern Portfolio Theory

There is a NEW MODEL OF INVESTING. A model based on the science of capital markets. Decades of research guide the way. Research shows that the traditional methods of investing fail. There are four specific traditional investing methods, or what we call myths, that prevent investors from capturing market rates of return:

  • Stock Picking
  • Market Timing
  • Track Record Investing
  • Costs of Investing

Click here to hear the story of “The Modern Portfolio Theory” and “The Free Market Portfolio Theory” as told by the Academic All-Stars who helped create both theories.

To counter these myths and to help investors experience “Peace of Mind Investing”, The Free Market Portfolio Theory is the answer to these investing myths. The “Free Market Portfolio Theory” was named by Mark Matson, The Abundance Coach and CEO of Abundance Technologies. Free Market Portfolio Theory synthesizes three critical academic components:

  • The Efficient Market Hypothesis
  • The Modern Portfolio Theory
  • The Three Factor Model

By utilizing these three components, advisors can offer a prudent, academic approach to investing that will help the investor walk the path of true peace of mind investing.

The Modern Portfolio Theory
The Modern Portfolio Theory is over 50 years old but relatively unknown to the retail investor. Institutional investors (portfolios of $25 million or more) have known about this theory for years. The Modern Portfolio Theory believes that diversification works. If your portfolio moves up and down together, it is not prudently diversified. The portfolio must be invested in non-correlated assets (assets that move in opposite directions). Eugene Farma and Kenneth French added The Three Factor Model, stating that portfolio investment returns are determined by three things:

  • How much stocks versus fixed income;
  • How much large stocks versus small stocks;
  • Value stocks versus growth stocks.