Harry Markowitz laid the foundation for the modern day study of finance. As a student of economics at the University of Chicago, Markowitz developed and published papers outlining the importance of diversification and risk analysis.
In 1952, Markowitz published a paper titled "Portfolio Selection." In this paper, Markowitz put forth the idea of diversifying a portfolio of stocks to produce optimal returns with respect to the level of risk involved. From this theory he developed the Markowitz Efficient Frontier – as it came to be called – which illustrates the set of portfolios that result in the greatest expected return per given level of risk.
Markowitz’ work in portfolio theory set the stage for further development in the study of finance and earned him a 1/3 stake in the Nobel Prize – alongside William Sharpe and Merton Miller. Markowitz’ theory - and extensions of his theory (e.g. the Capital Asset Pricing Model) - are still very relevant today – both in the classroom and on Wall Street. His ideas opened the door for an industry of financial specialists, analysts, and the like.
Cheers to Harry Markowitz!
Harry Markowitz - Business Week
Harry Markowitz - Wikipedia