Portfolio advice before modern portfolio theory: the Belle Époque for french analyst Alfred Neymarck

Maxime Merli, Antoine Parent and Cécile Edlinger
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Maxime Merli: UNISTRA - Université de Strasbourg
Cécile Edlinger: BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: In this article, we propose an original analysis of advice given by financial analysts prior to WW1. Our article focuses on the writings of A. Neymarck, one of the most popular French analysts in the early 20th Century. The creation of portfolios from a new database composed of the monthly returns of all the security types listed on the official Paris Stock Exchange from 1903 to 1912 has provided results demonstrating that Neymarck correctly identified the risk in a number of sectors. The performances of these portfolios, which were built according to Neymarck's guidelines, confirm Neymarck's ranking in terms of both risk and return: the richer the investor, the riskier and the more profitable his portfolio was seen to be. Finally, the Modern Portfolio Theory enables us to pinpoint the few imperfections in Neymarck's advice, which globally appears to be driven by reliable financial analysis.

Keywords: Portfolio advice; Diversification before WW1; Financial markets prior WW1 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-fmk, nep-his and nep-hpe
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Published in Business History, 2021, 63 (7), pp.1197-1221. ⟨10.1080/00076791.2019.1676231⟩

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Journal Article: Portfolio advice before modern portfolio theory: The Belle Epoque of French analyst Alfred Neymarck (2021)
Working Paper: Portfolio advice before modern portfolio theory: the Belle Époque for french analyst Alfred Neymarck (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03403339

DOI: 10.1080/00076791.2019.1676231

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