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The Theory and Practice of Rational Investing, Harry M. Markowitz worries about a "great confusion" that reigns in finance - namely, "the confusion between necessary and sufficient conditions for the use of mean-variance analysis." This is a serious matter. Mean-variance analysis has been the cornerstone of portfolio construction since Markowitz's seminal 1952 article. Meanwhile, academics and practitioners have been in constant search of the next holy grail that will guide the allocation of capital. Consider the endless stream of articles proposing enhancements to mean-variance analysis or substitutes for it. Substantial bodies of literature discuss optimizers that incorporate higher moments or attempt to replace variance with alternative risk measures. Another takes account of investors' so-called irrational tendencies. I recall a former colleague saying, "Let's not re-implement Harry Markowitz's PhD thesis for the millionth time. We can do better." But we have not. What are the objections to mean-variance analysis, and are they well grounded? Markowitz has devoted Risk-Return Analysis to these questions, concluding that mean-variance analysis is central to finance for good reason. This book proceeds in unhurried steps from a set of incontrovertible premises to the conclusion that mean-variance analysis is the best tool available for addressing a wide range of portfolio-construction problems.

In his famous book Confusión de confusions Joseph Penso de la Vega wrote: "If one were to lead a stranger through the streets of Amsterdam and ask him where he was, he would answer 'among speculators,' for there is no corner where one does not talk shares." And, Lodewijk Petram adds, "the people of Amsterdam were talking about options, too, and forward selling, quotations and prices, risk and speculation-all relating to the trade in the shares of the Dutch East India Company (the Vereenigde Oost-Indische Compagnie, VOC), which had been established in 1602. Fortunes were made and lost, and the men who engaged in this trade were wholly in thrall to it." Petram did extensive archival research, including mining the records of active traders, to shed new light on de la Vega's account of the Amsterdam stock market. The Dutch edition of his book appeared in 2011. Columbia Business School Publishing/Columbia University Press has just released the English edition, The World's First Stock Exchange, skillfully translated by Lynne Richards. It's an engrossing tale.