Which economist won the 1990 Nobel Prize for developing modern portfolio theory?

Harry Markowitz won the 1990 Nobel Memorial Prize in Economic Sciences for developing modern portfolio theory.

Markowitz’s portfolio theory was introduced in a 1952 paper and later expanded in his 1959 book Portfolio Selection. It showed how investors can evaluate portfolios by considering both expected return and risk, rather than judging each security in isolation.

A central insight is that diversification can improve a portfolio’s risk-return trade-off when assets do not move perfectly together. Portfolio risk depends not only on the volatility of individual holdings but also on their correlations. This is why adding a less-correlated asset can sometimes reduce overall portfolio volatility.

Markowitz shared the 1990 prize with Merton Miller and William F. Sharpe. The theory does not promise that diversification eliminates losses, and it relies on assumptions about expected returns, risk, and correlations that can be wrong in real markets.