Post-modern portfolio theory (or PMPT) is an extension of the traditional modern portfolio theory ("MPT", which is an application of mean-variance analysis or "MVA"). Both theories propose how rational investors should use diversification to optimize their portfolios, and how a risky asset should be priced.
Read more about Post-modern Portfolio Theory: History, Overview, The Tools of PMPT
Famous quotes containing the word theory:
“No one thinks anything silly is suitable when they are an adolescent. Such an enormous share of their own behavior is silly that they lose all proper perspective on silliness, like a baker who is nauseated by the sight of his own eclairs. This provides another good argument for the emerging theory that the best use of cryogenics is to freeze all human beings when they are between the ages of twelve and nineteen.”
—Anna Quindlen (20th century)