What is Markowitz diversification?

Question

Does it work at individual investor level?

Answer 1

It is the nobel prize winning theory that states that an overwhelming majority of return in a portfolio results from asset allocation as opposed to individual security selection.

In short, Markowitz diversification means adherence to an asset allocation philosophy- and less dpendence upon individual stock picking.

Yes- this works at the individual investor level.

It is also interesting to note that most layperson investors spend a majority of their time on stock selection when, per the Markowitz theory, it is minor in importance compared to the asset allocation decision.

Answer 2

Markowitz diversification is divercification between asset classes (stocks, bonds, cash, real estate, etc.)

Answer 3

A strategy that seeks to combine assets a portfolio with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return.