Getting Back to Business: Why Modern Portfolio Theory Fails Investors and How You Can Bring Common Sense to Your Portfolio (ePub)

Modern Portfolio Theory has failed investors. A change in direction is long overdue. We are in a time of enormous risk. Economic growth is anemic, and political risk to the capital markets is on the rise. In the U.S., a generation of white collar baby-boomers is heading into retirement with insufficient assets in their 401(k) programs, and industrial workers are stuck with materially underfunded pension plans. Against that backdrop, the investing industry s current set of practices and assumptions Modern Portfolio Theory (MPT) is based on a half-century old formula that is supposed to deliver the maximum amount of return for a given amount of risk. The trouble is that it doesn t work very well. In Getting Back to Business, dividend-investing guru Daniel Peris proposes a radical new approach radical in that it does away with MPT in favor of a more intuitive, common-sense approach practiced by business people in their own affairs everyday: cash returns on cash investments. In a profession utterly lacking a historical sensibility, Peris writes. One periodically needs to ask why we do things the way we do, how we got here, and whether perhaps there is a better way. Balancing detailed historical evidence with a practitioner s real-world expertise, Peris asks the right questions and provides a solution that makes sense in today s challenging investing landscape.