Is Modern Portfolio Theory flawed ???Is CFA material used in real world by portfolio managers?

Incoming freshman studying MPT, CFA and Investing.
Q1- why is variance and standard deviation used for risk .If a security is more volatile ,how does it mean it has more risk.Never understood the concept.Having read the book by Howard marks the most important thing I think that this concept is untrue.
Q2-is all this CFA and modern portfolio theory correct regarding in real investment world. many of its concept such as effiency are useless in the real world for PM's.
Q3-Is quant and financial engineering used mostly for derivatives purpose and complex strategies and not for normal long only AM/HF?

 
 

I'll take a stab at this.

Q1- Using standard deviation as measure risk basically means stocks that move 5% are riskier than those that move 0.5% per day. Think of Tesla vs a utility company. It's not perfect but it's a good general indication.

Q2-I'm unsure what you're asking.

Q3-There’s lots of AM/HF the provide quant products, think Blackrock, AQR, Two Sigma, DE Shaw. Etc.

 

Non consequatur minima omnis expedita. Eveniet velit quia asperiores voluptatibus animi. Corrupti est quia atque aperiam. Cumque sunt quos asperiores.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
GameTheory's picture
GameTheory
98.9
8
dosk17's picture
dosk17
98.9
9
DrApeman's picture
DrApeman
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”