Source: Cobden Centre
by Dr. Frank Shostak
“According to the MPT [Modern Portfolio Theory] framework, all market participants have the same expectations about future securities’ returns. Yet, if participants are alike in the sense of having homogeneous expectations, then why should there be trade? After all, trade implies the existence of heterogeneous expectations. A buyer expects a rise in the asset price while the seller expects a fall in the price. The MPT framework also implies that market participants have the same knowledge.” (11/10/26)
https://www.cobdencentre.org/2026/11/is-diversification-the-heart-of-investment-2/