How is MPT supposed to determine the risk in an individual security? The human e... | Hacker News

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		spott on Nov 8, 2014 \| parent \| context \| favorite \| on: The Best Investment Advice You'll Never Get (2008) How is MPT supposed to determine the risk in an individual security? The human element, and the number of variables under consideration seems to pretty much require MPT to be restated as "an approximation to a mathematically ideal portfolio for a given amount of risk". On the other hand, I don't know MPT at all. Can you give any info on how risk is quantified so well?

justincormack on Nov 8, 2014 [–]

Both the risk an correlation are of course unknowns, so people use historical values, which of course are not realistic.

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