Modern Finance and Portfolio Management Available to Purchase

The traditional view of the investment analyst is of someone who forecasts the performance of stocks using personal skills and any relevant information that he is able to acquire. A successful analyst should be able consistently to pick share portfolios that significantly out‐perform arbitrarily selected portfolios of similar risk. Modern Portfolio Theory (MPT), by providing a consistent basis on which assets could be classified according to risk, made possible a rigorous examination of the potential for generating excess returns through such ‘active’ portfolio management. The consensus amongst finance academics is that the evidence overwhelmingly supports the proposition that one cannot generate excess returns using purely public information, e.g. money supply forecasts or published accounting data, though few would seriously question the commercial value of monopolistic access to non‐public information.