Economics at your fingertips  

Modern Portfolio Theory and the Efficient Markets Hypothesis: How well did they serve Canada?s baby-boom generation?

Jim Fischer ()
Additional contact information
Jim Fischer: Mount Royal University

No 9511941, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: Modern Portfolio Theory (MPT) and the Efficient Markets Hypothesis (EMH) have had considerable influence over portfolio management strategies for the last forty years. This is also the time that the bulk of the baby boom generation entered and started to retire from the work force. Taking the example of an average Canadian family from 1977 to 2016, this paper examines how well the tenets of MPT and EMH served this generation of investors. A model investing strategy was constructed based on the principles of MPT and EMH. The results of this strategy were evaluated for the portfolio?s ability to adequately provide for the subject couple?s financial needs in retirement. Results of the model portfolio were compared to other popular investment alternatives. Using generally-accepted rules-of-thumb in financial planning, the model portfolio was found to have provided an adequate retirement income for the subject couple. Some of the other strategies moderately exceeded the returns of the model portfolio, while others underperformed this benchmark. Analysis of these discrepancies reinforced the significance of diversifying among and within asset classes, and of rebalancing portfolios through dynamic asset allocation.

Keywords: Modern Portfolio Theory (MPT); Efficient Markets Hypothesis (EMH); baby-boom generation; indexing; portfolio management (search for similar items in EconPapers)
JEL-codes: G11 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2019-10
New Economics Papers: this item is included in nep-fmk
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Published in Proceedings of the Proceedings of the 12th Economics & Finance Conference, Dubrovnik, Oct 2019, pages 61-75

Downloads: (external link) ... 95&iid=006&rid=11941 First version, 2019

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences
Bibliographic data for series maintained by Klara Cermakova ().

Page updated 2023-05-30
Handle: RePEc:sek:iefpro:9511941