Reflections : Beyond Portfolio Theory: The Next Frontier

Logically, investment theory's next frontier is to put into practice the rich set of tools that academia has bestowed on the investment community - starting with Harry Markowitz's seminal article on portfolio selection in 1952. Or is it? In fact, the next frontier lies beyond simply engineering the implementation of new investment decision tools. The time has come to integrate the powerful insights offered by information theory and principal-agent theory into a holistic, comprehensive theory of investing. Only such an expanded theory offers any material hope of improving the economic prospects of the millions of clients/beneficiaries of today's mutual funds, pension funds, endowments, and foundations