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 US, 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 industrys 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 doesnt 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 practitioners real-world expertise, Peris asks the right questions – and provides a solution that makes sense in todays challenging investing landscape.
Narrator: Fred Filbrich
Duration: 9 hours 54 minutes
Released: 18 Mar 2008
Publisher: McGraw-Hill Education