How the greatest thinkers in finance changed the field and how their wisdom can help investors today
In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest
Andrew W. Lo and Stephen R. Foerster
Mission
Welcome
Inspired by the legends featured in our book, In Pursuit of the Perfect Portfolio, our mission is to improve household wealth throughout the world through the dissemination of sound investment knowledge. This site complements our book by providing access to links and sources cited in our book, the video interviews with our luminaries, our Perfect Portfolio Investing blog, a self-assessment tool, and more.
Mission
Welcome
Inspired by the legends featured in our book, In Pursuit of the Perfect Portfolio, our mission is to improve household wealth throughout the world through the dissemination of sound investment knowledge. This site complements our book by providing access to links and sources cited in our book, the video interviews with our luminaries, our Perfect Portfolio Investing blog, a self-assessment tool, and more.
“The financial giants profiled in this book have inspired many generations of financial economists including us, and there’s no better way to honor their legacy than to help investors apply their ideas to craft the perfect portfolio.”
-Andrew W. Lo
“The decade-long journey on our book project was the culmination of careers dedicated to researching and teaching investments. This is our small way of paying it forward, hopefully inspiring the next generation of researchers, and helping households everywhere.”
-Stephen R. Foerster
“The financial giants profiled in this book have inspired many generations of financial economists including us, and there’s no better way to honor their legacy than to help investors apply their ideas to craft the perfect portfolio.”
-Andrew W. Lo
“The decade-long journey on our book project was the culmination of careers dedicated to researching and teaching investments. This is our small way of paying it forward, hopefully inspiring the next generation of researchers, and helping households everywhere.”
-Stephen R. Foerster
Investment Pioneers
The Ten Luminaries
Shaping the way we invest
Harry M. Markowitz
Nobel laureate in economics, 1990
While it is common wisdom now to think of creating a coordinated portfolio rather than investing in a collection of securities that each on their own look promising, Harry Markowitz provided a theory, as well as a process, for effective diversification. He helped create the industry of portfolio management.
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William F. Sharpe
Nobel laureate in economics, 1990
Bill Sharpe’s Capital Asset Pricing Model (CAPM) forever changed how portfolio managers approached their trade. Along the way, he built much of the modern framework for portfolio management, performance attribution, and risk-adjusted cost of capital estimation. The CAPM provided the intellectual foundations for passive investing and the multi-trillion-dollar index fund business.
Eugene F. Fama
Nobel laureate in economics, 2013
Gene Fama coined the phrase the Efficient Market Hypothesis or EMH. In an efficient market, prices fully and immediately reflect all relevant information. With his EMH, Fama probably influenced our thinking about price versus value more than anyone: when it comes to stocks, what you see is what you get.
John C. Bogle
Founder, The Vanguard Group
Investing in low-cost index funds started with pioneer Jack Bogle, who in 1975 started the world’s first index mutual fund, that later grew into the Vanguard Group, which at the time of his death in 2019, had about $5 trillion in assets. Boggle coined the phrase the Cost Matters Hypothesis.
Myron S. Scholes
Nobel laureate in economics, 1997
Myron Scholes is the co-originator of the Black-Scholes option-pricing formula with Fischer Black, a mathematical expression that determines the fair price of complex derivative securities like stock options. We can now glean vital information from derivatives, such as how risky investors think the stock market will be next quarter.
Robert C. Merton
Nobel laureate in economics, 1997
Bob Merton worked on an option pricing formula at the same time, and along the same lines, as Scholes and Black. Merton’s contribution to investing goes far beyond deriving the price of a call option. He has been involved in commercial ventures, including patenting an approach to retirement planning.
Martin L. Leibowitz
Co-author, Inside the Yield Book and The Endowment Model of Investing
Marty Leibowitz, known as the Bond Guru, was one of the first people on Wall Street to change the way investors thought about bonds and other fixed income products, transforming them from stodgy and boring buy-and-hold assets to a dynamic and exciting investments, helping pension funds understand their cash flow needs.
Robert J. Shiller
Nobel laureate in economics, 2013
Bob Shiller’s most famous work was a challenge to the conventional wisdom that financial markets are efficient. He found that stock prices move too much to be justified by subsequent changes in dividends. Based on Shiller’s research, understanding overall valuation metrics can help us to identify overvalued or undervalued markets.
Charles D. Ellis
Founder, Greenwich Associates
Charley Ellis, known as Wall Street’s wisest man, is recognized as the first insider to publicly question the benefits of active investment management. His insightful article, The Loser’s Game, helped inspire the growth of index funds, and he participated in one of the most innovative endowment funds at Yale University.
Jeremy J. Siegel
Author, Stocks for the Long Run
Jeremy Siegel, the Wizard of Wharton, is one of the most influential proponents of the importance of holding stocks in one’s portfolio. His classic book on investments, Stocks for the Long Run, builds a compelling, evidence-based case for why long-term investors should make stocks a big part of their portfolio.
