EDWIN J. ELTON, MARTIN J. GRUBER, STEPHEN J. BROWN, WILLIAM N. GOETZMANN
MODERN PORTFOLIO THEORY AND INVESTMENT ANALYSIS
More than 35 years have passed since we began to write the first edition of this book.
Progress has been made in several areas, and yet new changes have occurred that reopen old
questions. The acceptance of quantitative techniques by the investment community both here
and overseas has grown at a rate we would not have dreamed of then. The use of modern
portfolio techniques for stocks and bonds, dividend discount models, concepts of passive
portfolios, the incorporation of international assets in portfolios, and the use of futures and
options as risk control techniques are very widespread. Yet the world of investments continues
to change. No sooner do we begin to believe that the capital asset pricing model (CAPM)
describes reality than the arbitrage pricing theory (APT) comes along. No sooner do we convince
ourselves that markets are efficient than market anomalies become hot topics. No
sooner do we say that security analysis does not pay than we justify the cost of analysis in a
world of partially revealing prices. No sooner is market timing discredited than it arises again
under the name of tactical asset allocation.
