By Bruce Bower
Harry Markowitz won a 1990 Nobel Prize in economics for efficiently passing the buck — make that bucks. He was honored for developing a mathematical formula that helps investors maximize profit and minimize loss in their portfolios. After an exhaustive analysis of financial information, Markowitz’s procedure allocates a person’s stash of cash to an array of assets, with more money going to better bets.
Many banks rely on this or similar investment approaches, warning customers to avoid picking investments intuitively. Yet Markowitz, now at the University of California, San Diego, followed a hunch in 1952 when he split paycheck contributions to his retirement account equally between stocks and bonds.