Markowitz, Harry Max (1927-2023), an American economist, was awarded the Nobel Prize for economics in 1990, together with American economists Merton Miller and William Sharpe, for work on theories of financial economics. Markowitz contributed to a better understanding of the stock market. Markowitz’s portfolio theory showed that the best way to invest money is to spread it across investments that have different degrees of risk and different rates of return (profit). Markowitz also developed techniques for measuring risk, and these techniques are now commonly used by people investing in the stock market.
Markowitz was born in Chicago. He received his doctorate from the University of Chicago and was a student member of the Cowles Commission (now Foundation) for Research in Economics. The Cowles Foundation is a research center that laid the basis for modern econometrics (the application of mathematical and statistical techniques to economic theory). Markowitz worked for the RAND Corporation, a private research organization that studies defense questions, and later for General Electric Company, a leading manufacturer of electrical products. During the 1960’s, he developed a programming language called Simscript that helped speed up programming time for computer simulations of economic problems. His research applied mathematical computer techniques to business decisions under conditions of uncertainty, in particular to the stock market. In 1989, Markowitz was awarded the John von Neumann Theory Prize by the Institute for Operations Research and the Management Sciences, a professional organization, for his work on developing Simscript. He was awarded the Nobel Prize for his portfolio theory. This theory analyses how investors balance the risks involved in the stock market with the returns (profits) they hope to make. Markowitz died on June 22, 2023.
