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Historian-Turned-Investment Manager Proposes Alternative to Modern Portfolio Theory

| Feb 11, 2022 |

Daniel Peris, PhD, is an accomplished scholar who studied modern Russian history in his early career. Today, he oversees $25 billion in dividend-focused portfolios as senior vice president at the global investment firm Federated-Hermes.

In a Gabelli School Centennial Speaker Series event sponsored by the CFA Society New York, the Gabelli Center for Global Security Analysis, and the Museum of American Finance, Peris advised that it’s worthwhile to approach finance with a “historical sensibility.”

To that end, his latest book, Getting Back to Business: Why Modern Portfolio Theory Fails Investors and How you Can Bring Common Sense to Your Portfolio, dismantles the decades-old Modern Portfolio Theory (MPT)—which suggests that a single investment’s performance is less important than how it impacts an entire portfolio—in favor of getting cash returns on cash investments. Peris said that during this time of stunted economic growth and risky markets, MPT is no longer providing the high returns it once promised.

“The rules that we’re using all have a history and it’s important to know that history and to ask the simple question if the rules still make sense today,” he said. “MPT is a creature of its time, and probably not many of us are comfortable using technology from 70 years ago.”

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